Israeli Prime Minister Benjamin Netanyahu told Gaza's Hamas leaders to choose between peace and "the sword" on Tuesday as a diplomatic push intensified to end a week of violence in and around the strip.

"Our hand is outstretched in peace to those of our neighbours who want to make peace with us," Netanyahu said in a statement issued moments before militants said a truce would be announced in Cairo later on Tuesday evening.

"And the other hand is firmly grasping the sword of David against those who wish to uproot us from this country," he added in reference to the biblical warrior king.

About two hours after a rocket fired from Gaza crashed south of Jerusalem, causing no injuries but inciting temporary panic, Netanyahu said that constant pounding by the Israeli air force had exerted a heavy toll on the Hamas arsenal.

"We have already destroyed thousands of rockets and missiles aimed at Israeli citizens, including most of the long-range rockets," he said. "We continue to attack Hamas, Islamic Jihad and the rest of the terror groups."

In the morning, Netanyahu held talks with German Foreign Minister Guido Westerwelle, telling him Israel was looking to secure a "long-term" agreement that would ensure rockets were not smuggled into the Hamas-run territory.

"I believe that Germany can play a positive role in finding a solution to the conflict based on a long-term arrangement that ensures that such weapons do not again enter the Gaza Strip," Netanyahu's office quoted him as saying.

"I prefer a diplomatic solution," he said. "I hope that we can achieve such a solution, but if not, we have the full right to defend ourselves with other means and we shall use them."

He spoke as UN Secretary General Ban Ki-moon arrived for talks with Israeli and Palestinian leaders and US Secretary of State Hillary Clinton was expected to fly in overnight.

UN chief Ban Ki-moon met Netanyahu on Tuesday evening and urged him not to send in the troops.

"I'm here to appeal to all to halt fire," he said from a podium next to Netanayahu before their talks. "I strongly caution against a ground operation."

And US officials said Clinton would break away from an Asia visit to travel to Egypt, Israel and the West Bank, with Palestinian officials saying she was to meet Palestinian president Mahmud Abbas on Wednesday morning.

As truce efforts grew, Israel continued to build up its ground forces along the Gaza border, ready to go in if required, the Israeli official told AFP.

"Preparations for the ground incursion continue," he said.

"If we see that diplomacy does not bear fruit -- and the time we've given to diplomacy is limited -- all the preparations are being undertaken so that if and when the order is given the ground incursion can happen expeditiously."

The Knesset, Israel's parliament, earlier approved a request by Defence Minister Ehud Barak to raise to 75,000 the number of army reservists he can call up, in a move already approved by the cabinet.

At least 16,000 reservists had been mobilised by the end of last week, out of 30,000 callups previously authorised.

The army would not give an updated number on Tuesday, saying only that reservists were constantly being drafted according to need.

Meanwhile, Mohammed Deif, commander of Hamas' military wing, warned Israel against deploying more of its ground forces on the border with Gaza.

Deif encouraged all Gaza-based resistance movements to mobilise in anticipation of a possible ground war.