The two largest Palestinian militant groups, Hamas and Islamic Jihad, have declared a three-month cease-fire but the move has been dismissed by Israel.
Foreign Ministry deputy director-general Mr Gideon Meir said the militants' plan was simply to regroup.
"I will repeat what Foreign Minister Silvan Shalom said two hours ago to US national security adviser Condoleezza Rice - this cease-fire is a ticking bomb because it actually maintains the infrastructure of terror," Mr Meir said.
A statement from Hamas and Islamic Jihad said they had "suspended military operations against the Zionist enemy" and would stick to the deal if Israel fulfilled a number of conditions.
"[These include] the total cessation of all forms of Zionist aggression against our people, of incursions, demolitions, closures, sieges on cities, villages and refugee camps, including the siege imposed on [Palestinian] President Yasser Arafat, the bulldozing of agricultural land, attacks on land and property... the total cessation of all assassination operations, massacres and of all arrest and deportation campaigns against our people, their leaders and their fighters."
The cease-fire follows Israel's decision to start withdrawing forces from occupied Gaza territory tomorrow.
A joint truce declaration by all five militant factions was postponed earlier today because of wrangling over wording. It is not clear if the other armed groups, including one within the mainstream Fatah faction will follow.
The Israeli confirmation of its plan to disengage in Gaza came despite Palestinian militants putting off the announcement of a ceasefire.
The pullback followed high-level talks with Israelis and Palestinians involving US President George W Bush's foreign policy advisor Ms Condoleeza Rice.
The US-backed peace "road map" to peace has been hampered by an upsurge of violence since it was affirmed in a June 4th summit by President George W Bush, Israeli Prime Minister Ariel Sharon and Palestinian Prime Minister Mahmoud Abbas.