Defense Minister Ehud Barak made the decision late Thursday after Palestinians fired 40 rockets into Israel. The barrages continued Friday, with a Palestinian rocket hitting the Israeli town of Ashkelon, causing no casualties.
Israel pushed ahead with its military offensive against Gaza militants, killing two Palestinians in an air strike in the northern part of the territory, Hamas security officials said. One of the men was a Hamas militant who had just launched rockets into Israel, they said. The identity of the second Palestinian was not immediately clear.
Israel's defense ministry will decide whether to allow individual shipments of crucial humanitarian aid in Gaza, the Israeli officials said, but trucks bearing basic food items and other supplies will not enter for at least the next few days, they said.
The officials spoke on condition of anonymity because they were not authorized to discuss defense ministry policy with the media.
Israel has imposed a siege on Gaza since the militant Hamas group came to power there in June, and has tightened the blockade because Palestinian militants, acting with Hamas approval, bombard Israeli towns with rockets nearly every day. Basic supplies have been allowed in through two border crossings, but the new decision by Barak shut both of them.
The move followed days of intense violence inside the coastal territory, beginning Tuesday, when Israel sent special forces into Gaza, setting off the biggest clash in months.
At least 30 Palestinians, including a son of Gaza's Hamas strongman, Mahmoud Zahar, have been killed since the violence escalated Tuesday. Most were armed militants.
Hamas and other groups have fired more than 150 rockets and mortar shells since Tuesday, according to the Israeli military. The strikes caused no serious injuries, but have further traumatized battered Israeli residents who have been living with daily barrages for years.
Direct Hamas involvement in the rocket attacks is a new development this week. Since June, when the Islamic militants overran Gaza, they had allowed other groups to freely fire rockets at Israel.
The widening violence has clouded Israeli-Palestinian peace talks, resumed after a Mideast conference in November sponsored by President Bush. The spike in violence has drawn condemnations from moderate Palestinian President Mahmoud Abbas, Israel's partner in the peace negotiations.
On Thursday, Abbas spokesman Nabil Abu Rdeineh told The Associated Press that the violence is calling into question further talks.
"No one can proceed with negotiations when the situation is like this," he said.
Israel's military has been unable to counter the low-tech, short-range rockets that have plagued Israel's south for six years, killing 12 people. Air strikes and pinpoint ground operations have killed hundreds of Gaza militants, and full-blown invasions have caused widespread casualties and damage - but none of the measures have stopped the rocket fire for long.
Israel is working on an elaborate system to shoot down the rockets, but it won't be ready for another four years.
Militants have launched some 4,000 rockets and mortar rounds at southern Israel since Israel evacuated Gaza in the summer of 2005 after a 38-year occupation. The rockets have killed 12 people since 2001. Recently militants have been extending their reach as well, with one Iranian-made rocket flying 10 miles and hitting an Israeli city.
While ratcheting up its military response in Gaza, Israel has scaled back operations in the West Bank as it talks peace with Abbas' moderate government, and has granted amnesty to hundreds of Palestinian gunmen there. But some army raids continue, especially in the town of Nablus, considered a hotbed of militant activity.
Early Friday, Israeli troops killed a wanted Palestinian militant in Nablus, Palestinian medics said.
The militant was a commander in the Al-Aqsa Martyrs Brigades, an armed group tied to Abbas' Fatah movement. He was shot and killed by troops who surrounded the home where he was hiding out in the Balata refugee camp in Nablus, according to Palestinian medic Anan al-Tira.
The military had no immediate comment.