"We are exacting a heavy price from Hamas and the terrorist organisations and the Israel Defence Forces are prepared for a significant expansion of the operation," he told his cabinet, in broadcast remarks.
"The soldiers are ready for any activity that could take place," AFP quoted him as saying.
He gave no specifics and made no mention of the possibility of a ground offensive.
Gaza journalists wounded in Israeli attacks
Israeli aircraft hit two Gaza media buildings on Sunday, wounding eight journalists and drawing concern from press covering the fighting between Palestinian militants and the Jewish state.
The Israeli military said the attacks were pinpoint strikes on Hamas communication devices located on the buildings' roofs, and accused the group of using reporters as human shields to try and protect their operations.
Britain's Sky News, German ARD, Saudi-owned al Arabiya, Beirut-based al Quds television and other broadcasters operate from the two buildings, which are a block apart. One employee from al Quds TV lost his leg in the early morning strike.
The attack came on the fifth day of heavy air strikes on the coastal enclave which Israel says are needed to halt repeated militant rocket launches into its territory.
The Foreign Press Association covering Israel and the Palestinian Territories issued a statement in which it expressed concern over the bombings and quoted a UN Security Council resolution that condemned attacks against journalists.
Israeli military spokeswoman Avital Leibovich denied that journalists were the target of the strike. "Hamas took a civilian building and used it for its own needs. So the journalists ... were serving as human shields for Hamas," she said.
In Gaza City, as the Israeli air force attacked from above, Israeli naval forces opened fire, launching more than a dozen shells towards the shore, an AFP correspondent reported.
Gaza invasion would cost Israel international support: UK
A ground invasion of the Gaza Strip would lose Israel much international sympathy and support, British Foreign Secretary William Hague warned Sunday.
Hague told Sky News television it was much more difficult to limit civilian casualties in a ground assault and it would threaten to prolong the conflict.
His comments came after Israeli Prime Minister Benjamin Netanyahu said the armed forces were ready to "significantly expand" their operation against militants in the Hamas-run Gaza Strip as it entered its fifth day.
Britain has said that Hamas bears the principal responsibility for the crisis due to perpetual rocket attacks on Israeli territory.
But Hague said it would be hard for the international community to maintain sympathy with Israel if it launched a ground operation.
"That, of course, is a different proposition," he said.
"The prime minister (David Cameron) and I have both stressed to our Israeli counterparts that a ground invasion of Gaza would lose Israel a lot of the international support and sympathy that they have in this situation.
"It's much more difficult to restrict and avoid civilian casualties during a ground invasion and a large ground operation would threaten to prolong the conflict.
"So we have made our views very clear on that with Israel, just as we have made very clear our view that the barrage of rockets from Gaza onto southern Israel is an intolerable situation for the Israelis and it's not surprising they have responded to that.
"A ground invasion is much more difficult for the international community to sympathise with or support - including the United Kingdom."
He said Britain would like to see an agreed ceasefire, with an end to the rocket attacks being an essential component of any peace deal.
"In the absence of that ceasefire, we of course are calling on all involved to deescalate, to avoid civilian casualties and to abide by international humanitarian law," he said.
Hague said it would be a "mistake" for the Palestinians to try to gain observer status at the United Nations at this point as it would be "divisive" with the United States.
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