In Syria, Israeli warplanes flew low over the palace of President Bashar Assad in a move to warn him off supporting the militants. The tension came as it was claimed two other Israelis were also being detained.

Sunday's kidnapping of Corporal Gilad Shalit, 19, was the first Palestinian attack since Israel pulled out of the Gaza Strip 10 months ago.

Most of the strip's 1.4million residents are now without power after the Israeli army fired missiles at its only power station. Thousands have been left without running water after pipes were damaged in central Gaza, leading the Palestinian government to warn of "epidemics and health disasters".

Three bridges have also been destroyed – effectively cutting Gaza in two – in a bid to prevent militants moving the prisoners. Israeli planes dropped leaflets over the strip warning families to stay inside. They read: "For your security and our interest in avoiding harm to innocent civilians who are not involved in operations against our forces, you have to avoid moving in the area. Anyone obstructing the operation ... is going to put himself into danger."

Late last night a high-ranking Palestinian minister was captured by Israel.

And Israel's Premier Elmut Olmert warned of "extreme action" to free the men.

He said: "We won't hesitate to carry out extreme action to bring Gilad back to his family. All the military activity that started overnight will continue in the coming days."

He repeated that Israel will not negotiate Cpl Shalit's release with militant groups. The militants have demanded the freeing of hundreds of Palestinian women and children held in Israeli jails in exchange for information about Cpl Shalit.

Families of the jailed Palestinians demonstrated in favour of their relatives' release.

The Popular Resistance Committee, which has links to the Palestinians' ruling Hamas group, last night said they were holding Eliahu Asheri, 18, who they would kill if attacks continued.

Militants said they were also holding a 62-year-old Israeli. Israel was threatening to assassinate Hamas's major players, especially Syria-based political chief Kaled Mashaal.