The Hamas leadership announced Sunday a one-week ceasefire in Gaza, saying Israel should use that time to withdraw its forces and open all border crossings in the territory.
The news from Hamas's Syrian-based deputy leader, Moussa Abu Marzouk, came about 12 hours after Israel declared its own unilateral ceasefire to end its 22-day-old offensive in Gaza.
Islamic Jihad and other Palestinians factions have agreed to honour the truce declared by Hamas.
Prime Minister Ehud Olmert announced a ceasefire Saturday night after Israeli's 12-member security cabinet voted in favour of the move, saying the operation's goal of disabling Hamas's military capabilities has been achieved.
Olmert gave no timetable for withdrawing ground forces from Gaza, but said troops would stay on the ground for the time being.
An Israeli security chief told cabinet ministers that the military operation "is not over," and the next few days would be critical to determining whether it would be relaunched.
At the start of the weekly Israeli cabinet meeting Sunday, Olmert called the ceasefire "fragile" and said his country reserves the right to renew its military operation in Gaza if Hamas decides to strike at more Israeli targets.
"The decision on the ceasefire leaves Israel the right to react and renew its military actions if the terror groups continue firing," Olmert told his cabinet.
"We are monitoring all of the developments, minute after minute, hour after hour. The military forces in the strip have their eyes wide open and are attentive to any rustle and ready for any order from their commanders," he added.
Israeli ceasefire put to test
There were reports that 13 rockets and four mortar shells were fired in the Ashkelon area of southern Israel on Sunday afternoon after the Israeli ceasefire went into effect.
Israel launched its offensive on Dec. 27 to try to halt near-daily Hamas rocket attacks against southern Israel and curb the militant group's smuggling of arms through tunnels under the territory's border with Egypt.
Palestinian medics say the fighting has killed at least 1,140 Palestinians, roughly half of them civilians. Thirteen Israelis have been killed, four by rocket fire and nine in ground battles in Gaza, according to the government.
With the lull in fighting, foreign journalists have been allowed to use the Erez border crossing to visit the Gaza Strip for the first time since the Israeli military campaign began.
They surveyed widespread property damage in the northern town of Beit Lahiya, where Israeli tanks have chewed up streets and air strikes have left piles of rubble where several buildings once stood.
Israeli aircraft had pounded 50 Hamas positions in the town early Saturday.