Israel has vowed to secure the release of a young soldier missing since Palestinian militants attacked an army post near the Gaza Strip.
The 19-year-old had been in the Israeli army 11 months
Cpl Gilad Shalit, 19, was presumed captured when a joint attack by militant groups killed two soldiers.
Defence Minister Amir Peretz vowed a "painful" response to the attack, but any military action is likely to be delayed to allow the soldier's return.
Hamas' military wing and two other groups said they were responsible.
The militant group Hamas governs the Palestinian Authority following victory in parliamentary elections in January.
Members of the Hamas-led government have denied any knowledge of the abduction though they have publicly called for the soldier to be well treated if he's being held.
Cpl Gilad is the first Israeli soldier to be seized by Palestinians since 1994.
Palestinian Authority (PA) President Mahmoud Abbas continued talks on Monday with Prime Minister Ismail Haniya of Hamas.
On Sunday, Mr Abbas urged Hamas to make efforts to release Cpl Shalit, saying his capture was against Palestinian national interests.
Nevertheless, Israel's security cabinet said it held the PA responsible for the capture and well-being of the soldier.
"This was a very serious Hamas terrorist attack," said Israeli Prime Minister Ehud Olmert in a media interview.
He said Israel saw the Palestinian Authority headed by President Mahmoud Abbas, and the Hamas-led Palestinian government, as "responsible for the incident, with all that implies".
Cpl Shalit was the gunner on a tank attacked in a pre-dawn raid by militants from a 300 metre tunnel dug under the Gaza border fence near the Kerem Shalom crossing, Israeli military officials said.
Seven or eight gunmen lobbed grenades at the tank and an empty armoured personnel carrier, the military said.
Lt Hanan Barak and Sgt Pavel Slutsker, both 20, died in the attack, Israel's army said in a statement.
The raid was claimed by the military wing of the ruling Hamas party, Izzedine al-Qassam, the Popular Resistance Committees and a group calling itself the Army of Islam.
At least two Palestinian fighters were also killed in fighting during the assault.
There was no immediate word about the safety or condition of Cpl Shalit, but Israeli military officials said they believed he was alive, and held Hamas responsible for his welfare.
"Hamas is involved in this matter from head to foot, literally," Israeli army chief of staff Dan Halutz said. "The soldier is alive, and therefore they bear responsibility for his fate."
The attack was the largest attack since Israeli troops left Gaza
Hamas said the operation was a response to recent deaths of civilians and the targeted killings of two militant leaders.
But it said it only knew of the apparent capture of the soldier from Israeli reports and asked his captors to "treat him well".
The BBC's Alan Johnston in Gaza says the assault on the border post marks a very serious escalation, adding that Gaza is braced for an Israeli military response.
Israeli tanks pushed into the Gaza Strip after the attack, apparently in a search for the entrance to the tunnel.
Hamas, currently the governing Palestinian party, ended an informal ceasefire with Israel earlier in June following the deaths of eight members of a Palestinian family on a Gaza beach.
Hamas blamed the beach explosion on shelling from an Israeli warship, a charge Israel has denied.