"The situation as it is today cannot continue," Avigdor Lieberman told troops and commanders at Reim army base, near southern Israel's border with Hamas-ruled Gaza. "We are not prepared to accept the level of violence we see week after week."

The Islamist Hamas has organised months of often violent border protests, with at least 205 Palestinians and one Israeli killed since March 30.

The protesters are demanding to be allowed to return to land now inside Israel, from which their families fled or were displaced during the 1948 war surrounding the creation of the Jewish state.

"We must strike Hamas a hard blow, this is the only way to bring the situation back to what is was before and to reduce the level of violence," Lieberman said in Hebrew, adding it must be collective decision of the 12-member security cabinet.

"Unfortunately neither the minister of defence nor the prime minister, nor the prime minister together with the minister of defence can make such a decision on their own," he said.

Lieberman said that deadly clashes on Friday, after Israel helped facilitate diesel shipments to the fuel-starved Gaza Strip, were a turning point.

The deal, brokered by the United Nations and backed by the United States, Israel and others, had seen thousands of litres of Qatari-bought fuel trucked into Gaza daily since last Tuesday.

But on Friday night, Lieberman suspended the shipments in response to border violence which the Hamas-run health ministry said seven Palestinians were killed.

The Israeli army could only confirm five dead, whom it said were shot dead after breaking through the border fence and attacking an army post.

Israeli army spokesman Jonathan Conricus said around 20 Palestinians had crossed the border in an "organised attack" after an explosive device destroyed a portion of the fence.

Four Israeli tanker trucks had delivered fuel to Gaza on Friday morning before "an outburst of violence," Lieberman said.

"We tried all options," he added. "I think that at this stage we have exhausted (the possibilities. Now it is time for decisions."