Friday morning, Israeli authorities announced that they have not rejected a proposal put forth by Hamas for the release of the Israeli soldier captured Sunday, as was stated by Egyptian President Hosni Mubarak Thursday night.  The possibility for a negotiated solution is apparently back on the table, as a planned ground invasion into Gaza was postponed by the Israeli Defense Minister.

But Israeli aircraft continued to bombard Gaza from the air, destroying government buildings and the two main power plants, leaving Gaza residents in the dark.

Israeli jets caused sonic booms over Gaza City all night and throughout the morning, and hundreds of artillery rounds rained down on northern and southern Gaza – at least 1200 since Sunday.

But diplomatic solutions may still be possible – while Israeli officials did not say they had agreed to the conditions given by Israeli resistance groups for the release of the soldier (release of Palestinian women and children being held captive inside Israel  an end to the military attacks on Gaza), they did rush to counter the claim that they had rejected the offer.

The soldier, a Cpl Shalit, captured Sunday in a Palestinian ambush on an Israeli military base, is believed to be in the custody of militants of the Popular Resistance Committees.

Mark Regev, a spokesman for the Israeli foreign ministry, said: "We are talking to the international community, such as the European Union and Egypt. If we can achieve the release of our soldier through international intervention, then we can de-escalate the situation."