"A decision was taken that for the time being there is a temporary hold on the ground incursion to give diplomacy a chance to succeed," he said after a late-night meeting of Prime Minister Benjamin Netanyahu's key ministers, the Forum of Nine.
"They discussed both the state of the diplomacy and the military operation," he said on condition of anonymity.
As an Egyptian-brokered ceasefire plan took shape at indirect negotiations in Cairo between Israel and a Hamas team, a stream of top-level diplomats headed for the region to throw their weight behind efforts to end the violence which on Tuesday entered its seventh day.
UN chief Ban Ki-moon, who is currently in Cairo, is to meet Israeli President Shimon Peres and US officials said Secretary of State Hillary Clinton would break away from an Asia visit to travel to Israel, Egypt and the West Bank.
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Palestinian officials said she was expected to visit Ramallah on Wednesday morning for talks with Palestinian president Mahmud Abbas.
At the same time Israel is building up its ground forces along the Gaza border, ready to go in if required, the Israeli official told AFP.
"Preparations for the ground incursion continue," he said.
"If we see that diplomacy does not bear fruit -- and the time we've given to diplomacy is limited -- all the preparations are being undertaken so that if and when the order is given the ground incursion can happen expeditiously."
A statement from the Knesset, Israel's parliament, said its Foreign Affairs and Defence Committee would meet during the day to rubber stamp a request by Defence Minister Ehud Barak to raise to 75,000 the number of army reservists he can call up, in a move already approved by the cabinet.
At least 16,000 reservists had been mobilised by the end of last week, out of 30,000 callups previously authorised.
The army would not give an updated number on Tuesday, saying only that reservists were constantly being drafted according to need.
Click the interactive map below to see more information about missile strikes in Gaza and Israel. This map is a guide only, and does not represent the hundreds of rocket attacks that have been reported in both Israel and Gaza in the last few days.
