"There is no chance of extending the calm," Hamas spokesman Fawzi Barhoum said in Gaza. He blamed Israel for the breakdown.
In Lebanon, Hamas official Osama Hamdan said the truce would end today.
It was not clear whether this was Hamas's final word, however. The group, which rules Gaza, has been issuing contradictory statements this week about extending the truce.
There was a chance the lull could be restored despite recent violence. Both sides appeared to be jockeying for position, trying to improve the terms of the truce, but a single attack by either side causing significant casualties could spark a larger conflict.
The truce started coming apart in November, when Israeli troops entered Gaza to destroy a tunnel that the army said militants were trying to dig under the border. Gaza rocket squads responded by resuming daily barrages into Israel's south.
Though violence and casualties dropped significantly during the cease-fire, neither side was satisfied. Hamas complained that Israel never fully opened Gaza's border crossings to let vital cargo in and exports out, while Israel charged that Hamas used the time to replenish its arsenal with arms smuggled in through dozens of tunnels under the territory's border with Egypt.
Speaking at Tel Aviv University, Prime Minister Ehud Olmert of Israel denounced the Hamas regime in Gaza but did not refer directly to the escalating violence.
Olmert, who leaves office next year, urged serious negotiations on a peace treaty with the Palestinians, but stressed that would require "painful concessions."
He said it was also important to continue recent indirect talks with Syria.
The Likud Party leads in polls ahead of Israel's Feb. 10 elections, and its leader, Benjamin Netanyahu, has said he would concentrate on economic cooperation instead of a peace deal.
Olmert warned of the consequences of refusing to negotiate seriously.
"An Israeli government that does not show flexibility, political initiative, and readiness for significant and painful compromises to win peace with the Palestinians and the Syrians is liable to be pushed into a corner, bring on itself harsh international criticism that would be harmful from the security and economic points of view," he said.
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