Israeli troops staged one of the largest raids into the Gaza Strip in recent months on Wednesday, killing eight Palestinians and wounding more than 40 in gun battles that began before dawn and lasted much of the day. One Israeli soldier was also killed.

The Israeli soldiers, in tanks, on foot and backed by helicopters, exchanged fire with Palestinian militants in the northern Gaza farming town of Beit Hanun, the launching ground for many of the Palestinian rockets fired into southern Israel.

As the two sides battled, Prime Minister Ehud Olmert’s security cabinet met in Jerusalem and debated whether to step up the 4-month-old military operations in Gaza.

In recent weeks, some senior political and military officials have expressed support for expanded operations to halt Palestinian rocket fire in northern Gaza and rooting out weapons smuggling tunnels on Gaza’s southern border with Egypt.

But the security cabinet chose not to escalate military actions, at least for now. In a statement, the security cabinet said the military would continue the “current security activity.”

Avigdor Lieberman, the leader of Israel Beiteinu, a far-right party that just joined the governing coalition, said the military should take a much tougher approach, Israel radio reported.

However, Israel’s defense minister, Amir Peretz, who leads the left-leaning Labor Party, opposed expanding the military operations, and his position carried the day.

“There is no intention to carry out operations for show, or operations to appease public opinion, but only defined operations whose goal is clear, whose purpose is not only deserving but necessary,” Mr. Peretz said.

Still, the incursion on Wednesday was one of the most wide-ranging since the Israeli military re-entered Gaza at the end of June.

The Israeli military pulled out of Gaza in September 2005, but returned after an Israeli soldier, Cpl. Gilad Shalit, was captured and taken into the territory.

In a statement released by his office on Wednesday, the Palestinian Authority president, Mahmoud Abbas, demanded that Israel “cease immediately all hostile actions against our people.”

Wednesday’s operation, like many that have preceded it, involved dozens of Israeli tanks and other armored vehicles. In addition, hundreds of infantry soldiers walked into the territory, which is much less common.

Most of the fighting was on the outskirts of Beit Hanun, in the northeast corner of Gaza. The eight Palestinians killed are five militants, a member of the Palestinian security forces and two people whose identities could not be immediately determined. Most of the wounded also were militants, though some civilians were hurt, according to Palestinian security officials and medical workers.

The Israeli military said its forces had come under fire from Palestinians with automatic rifles and antitank missiles.

Israeli troops took up positions atop Palestinian homes. Helicopters and drones flew overhead and carried out occasional strikes.

The Palestinians still managed to fire several rockets into southern Israel, lightly wounding one civilian, the military said.

Rami Hamad, a 24-year-old Hamas militant who was wounded, said he had been shot in the leg while trying to reach a fellow militant, Ahmad Saadat, who died.

“They have the sophisticated military power, but in our religion it says prepare whatever you have to confront the enemy,” Mr. Hamad said at Kamal Adwan Hospital in Gaza, where he was being treated. “Holy war is an obligation.”

At the hospital morgue, Yousef Saadat, 43, wept as he learned that his son had been killed. Mr. Saadat said he had urged his son to finish school and become a teacher, which he did. But Ahmad still insisted on becoming a militant. “He refused to get married,” Mr. Saadat said. “He spent his time preparing for martyrdom.”

The Israeli forces closed off the entrances and exits to Beit Hanun, and it was not clear how long they intended to remain. In recent months, the Israeli raids have typically lasted a day or two before the forces pulled back.

Since the Israeli troops returned to Gaza four months ago, more than 250 Palestinian militants and civilians have been killed, according to Palestinian and Israeli rights groups. Three soldiers have died.

Meanwhile, in the latest measure of the Palestinian economic crisis, Palestinian government revenue has fallen by 60 percent since Hamas, the radical Islamic group, came to power in March, the International Monetary Fund said in a new report.

Palestinian Authority revenue for the April-September period was $500 million in 2006, down from $1.2 billion during the same period a year earlier, the report said.

Israel, the European Union and the United States classify Hamas as a terrorist group and cut the flow of money to the government when it took over. As a result, the Palestinian Authority has paid salaries to government workers only partially and sporadically.

The sharp drop in government revenues was partly offset by increased international aid to nongovernmental groups. The aid for the April-September period was $420 million, up from $230 million a year earlier. Still, the overall economy has been contracting rapidly in recent months.

Taghreed El-Khodary contributed reporting from Beit Hanun, Gaza.

Copyright 2006 The New York Times Company