Late Monday, Israel decided to allow some diesel fuel and medicine into Gaza on Tuesday.
"We think Hamas got the message. As we have seen in the past couple of days, when they want to stop the rockets, they can," said the Israeli Foreign Ministry spokesman, Arye Mekel, confirming the decision.
Gaza's power plant shut down late Sunday, plunging Gaza City into darkness, and gas stations and many bakeries stopped operating. Health officials warned that hospital generators were running out of fuel.
"We have the choice to either cut electricity on babies in the maternity ward or heart surgery patients or stop operating rooms," said Health Ministry official Moaiya Hassanain.
International food aid may be suspended by the week's end if the closures continue, a U.N. aid agency spokesman said Monday, because of a shortage of fuel and plastic bags used to pack food. Most Gaza residents rely on food aid.
"We are going to have to suspend operations on Thursday or Friday," said Chris Gunness, spokesman for the United Nations Relief and Works Agency, which distributes food aid to 860,000 Palestinian refugees in Gaza. The World Food Program, which gives food to another 270,000 Gaza residents, said it would also have to suspend distribution by Thursday, because they expected their fuel used to power distribution trucks to run out.
"We are all in a very vulnerable situation because of limited supplies," said John Ging, head of UNRWA.
Waiting in a line at the only open bakery for miles around, Mohammed Salman said he spent far more on a taxi getting to the shop than he would on bread. "I'm going to buy something that my family can keep for only two days because there is no electricity and no refrigerator," Salman said. "We cannot keep anything longer than that."
Olmert said he won't allow a humanitarian crisis to unfold, but also warned that Gaza's 1.5 million residents won't be able to live a "pleasant and comfortable life" as long as southern Israel comes under rocket attack from Gaza.
"As far as I'm concerned Gaza residents will walk, without gas for their cars, because they have a murderous, terrorist regime that doesn't let people in southern Israel live in peace," Olmert told legislators from his Kadima Party.
In addition to the fuel it receives from Israel to power its electrical plant, Gaza gets about 70 percent of its electricity directly from Israel - and that has not been stopped, Israeli officials said.
The power plant supplies most of the remaining electricity, and Israeli officials acknowledged that the fuel used to supply it has been stopped.
Daily rocket fire into its southern communities have virtually paralyzed life since a spike in fighting last week that followed a small Israeli ground operation in Gaza.
Israel sealed all crossings into Gaza last week in response to the fighting, cutting off fuel, food and medicine.
Gazans said Monday that they were eating less meat and dairy products since they had no power for refrigerators. The price of meat has doubled in 10 days.
Palestinian President Mahmoud Abbas renewed peace talks with Israel after a U.S. peace conference in November. On Monday, some Palestinians urged Abbas to break them off.
Negotiators for Abbas' government will raise the Gaza situation in the next negotiating session, said Nabil Shaath, Abbas' representative in Egypt.
Hamas leaders in Gaza said their West Bank rivals were partly to blame for the crisis, by not loudly condemning Israel's moves in the strip. They called on Arab countries to help, pointedly ignoring their rivals in the West Bank.
The Gaza prime minister, Ismail Haniyeh of Hamas, demanded that Egypt open its border with Gaza to allow in supplies, "We need actions, and not statements," he said, suggesting that Hamas send a delegation to Egypt to discuss the idea.
Hundreds of Gaza residents, doctors in white coats, Hamas lawmakers and drivers with their ambulances demonstrated near the border with Egypt. They demanded Egypt open the crossing.
"Why are Arab countries partners to this embargo?" said Marwan Abu Ras, a Hamas lawmaker.
