By Samia Nakhoul, Andrew Mills, Nidal al-Mughrabi and Humeyra Pamuk
DOHA/TEL AVIV (Reuters) -Israeli Prime Minister Benjamin Netanyahu on Wednesday rejected Hamas' latest offer for a ceasefire and return of hostages held in the Gaza Strip, but U.S. Secretary of State Antony Blinken said there was still room for negotiation toward an agreement.
Hamas, the Palestinian militant group that rules Gaza, proposed a ceasefire of 4-1/2 months, during which all hostages would go free, Israel would withdraw its troops from Gaza and an agreement would be reached on an end to the war.
The Hamas offer, which was first reported by Reuters, was a response to an earlier proposal drawn up by U.S. and Israeli spy chiefs and delivered to Hamas last week by Qatari and Egyptian mediators.
Calling Hamas' position "delusional," Netanyahu renewed a pledge to destroy the Islamist movement, saying there was no alternative for Israel but to bring about its collapse.
"The day after is the day after Hamas. All of Hamas," he told a press conference, insisting that total victory against Hamas was the only solution to the four-month-old Gaza war.
"Continued military pressure is a necessary condition for the release of the hostages," Netanyahu said.
But Blinken's comments, following a meeting with Netanyahu, suggested forging a truce agreement was not a lost cause.
"There are clearly nonstarters in what (Hamas has) put forward," Blinken said at a late-night press conference in a Tel Aviv hotel, without specifying what the nonstarters were.
"But we also see space in what came back to pursue negotiations, to see if we can get to an agreement. That's what we intend to do."
Blinken met the leaders of Qatar and Egypt on Tuesday and Palestinian President Mahmoud Abbas in Ramallah on Wednesday.
A senior Hamas official, Sami Abu Zuhri, described Netanyahu's remarks as "political bravado" that showed the Israeli leader's intention to further pursue conflict in the region.
Another Hamas official, Osama Hamdan, said a Hamas delegation led by senior Hamas official Khalil Al-Hayya would travel on Thursday to Cairo for ceasefire talks with mediators Egypt and Qatar. Hamdan urged Palestinian armed factions to go on fighting.
Israel began its military offensive after Hamas militants from Gaza killed 1,200 people and took 253 hostages in southern Israel on Oct. 7. Gaza's health ministry says at least 27,585 Palestinians have been confirmed killed, with thousands more feared buried under rubble. There has been one truce to date, lasting a week at the end of November.
HAMAS PROPOSES THREE-PHASE TRUCE
Israel had previously said it would not pull its troops out of Gaza or end the war until Hamas was wiped out.
But sources close to the negotiations described Hamas as taking a new, three-phase approach to its longstanding demand to end the war, proposing this as an issue to be resolved in future talks rather than a condition for the truce.
According to the offer document seen by Reuters and confirmed by sources:
* During the first 45-day phase all Israeli women hostages, males under 19 and the old and sick would be freed, in exchange for Palestinian women and children held in Israeli jails. Israel would withdraw troops from Gaza's populated areas.
* Implementation of the second phase would not begin until the sides conclude indirect talks over the requirements for ending mutual military operations and restoring complete calm.
* The second phase would include the release of remaining male hostages and full Israeli withdrawal from all of Gaza. The remains of the dead would be exchanged during the third phase.
Washington has cast the hostage and truce deal as part of plans for a wider resolution of the Middle East conflict, ultimately leading to reconciliation between Israel and Arab neighbours and creation of a Palestinian state.
Netanyahu rejects a Palestinian state, which Saudi Arabia says is a requirement for the kingdom to normalise relations with Israel.
Israel has sought to capture Khan Younis, the main city in Gaza's south. Last week, Israel said it plans to storm Rafah, a move U.N. Secretary-General Antonio Guterres said on Wednesday would "exponentially increase what is already a humanitarian nightmare with untold regional consequences."
The Israeli military said it had killed dozens of militants in fighting over the last 24 hours. It has made similar claims throughout the fighting in Khan Younis which could not be independently verified.
In Rafah, on Gaza's southern edge where half of the enclave's 2.3 million people are penned against the border with Egypt, the bodies of 10 people killed by Israeli strikes overnight were laid out in a hospital morgue. At least two of the shrouded bundles were the size of small children. Relatives wept beside the dead.
Bob Kitchen, vice president of emergencies at the International Rescue Committee, said a move by Israel toward Rafah would "end the humanitarian lifeline from Egypt."
"If they aren’t killed in the fighting, Palestinian children, women and men will be at risk of dying by starvation or disease" he said.
Palestinian health officials say an Israeli airstrike killed another three people in a house in Rafah on Wednesday. The officials said a senior Palestinian police officer and Hamas member, Majdi Abdel-Al, was killed in an Israeli airstrike on a car that was tasked to secure aid trucks in Rafah.