GAZA CITY (AFP) - Israeli tanks punched their way towards Gaza City on Monday in some of the heaviest clashes of the war as Prime Minister Ehud Olmert vowed to hit Hamas with an 'iron fist' unless it stopped firing rockets. A defiant Hamas meanwhile said it was closer than ever to victory after 17 days of conflict which have so far left more than 900 Palestinians dead but not halted the Islamists' targeting of southern Israel with makeshift missiles. Infantry units, bolstered by thousands of newly-deployed reservists, battled Hamas gunmen across the region as Olmert insisted Israel was achieving the objectives of Operation Cast Lead. "We want to end the operation when the two conditions we have demanded are met: ending the rocket fire and stopping Hamas's rearmament. If these two conditions are met, we will end our operation in Gaza," Olmert said in a speech in the southern town of Ashkelon. "Anything else will meet the iron fist of the Israeli people, who are no longer ready to tolerate the Qassams (rockets)." An army spokesman said that close to 30 missiles had been launched from Gaza during the course of the day, although there were no reports of casualties. A spokesman for the Hamas government which has run Hamas since June 2007 said its Israeli enemies had been left stunned by the Islamists' resistance. "We can assure our people that victory is now closer than ever," said Hamas government spokesman Taher al-Nunu. The bullish comments from Olmert and Hamas came as Gaza residents recounted how tank units had advanced several hundred metres (yards) in the neighbourhoods of Eijline, Tuffah and Zeitun on the southern rim of Gaza City where the sound of gunfire echoed constantly. Troops also staged an incursion into the southern town of Khan Yunis where witnesses said some 35 houses were destroyed. Medics said 20 Palestinians were killed in the latest fighting, bringing the overall toll to 917, including 277 children. A further 4,100 have been wounded. An army spokesman said the air force hit more than 25 targets, including four rocket launch sites and two cars in which Hamas fighters were travelling. Troops had also seized anti-aircraft missiles, mortar shells and machine guns, the spokesman added. Egyptian President Hosni Mubarak has been pushing a plan which calls for an immediate ceasefire to allow humanitarian aid into Gaza, talks on opening Gaza's border crossings and taking steps to prevent arms smuggling. Palestinian prime minister Salam Fayyad, whose remit is limited to the West Bank, said the initiative offered the best hope of peace, putting pressure on both Israel and Hamas to respond positively. "He who refuses, voices reservations or moves slowly on this initiative bears the responsibility of explaining themselves, especially to the people of Gaza," Fayyad said. Ex-British premier Tony Blair, now a peace envoy for the international community, said after meeting Mubarak that the elements for an immediate truce are in place and talks were "at a sensitive and delicate" stage. Spanish Foreign Minister Miguel Moratinos, in Cairo for talks with his Egyptian counterpart Ahmed Abul Gheit, also struck a positive note by predicting the offensive would end "in a few days" and Egypt "could announce a ceasefire" between Israel and Hamas. Mubarak's initiative also won the support of Jordan's King Abdullah II who said in a statement that he "supports Egypt's efforts to reach an immediate ceasefire and end the suffering of our brothers in Gaza." Meanwhile, Israel suffered another humiliating reverse at the hands of the United Nations, when the world body's Human Rights Council adopted a resolution accusing it of "grave" human rights violations against Palestinians. The resolution setting up a fact-finding mission to investigate Israeli violations against Palestinians was passed after a split opened up between Western countries and the others over the wording.