"Israel has choices, whether to be prepared for a long attrition warfare or go for a wider ground operation where the Israeli tanks will turn into toys," Xinhua quoted Al-Qassam Brigades' spokesman as saying in a televised speech.
He stressed that the current battle cannot end without lifting the blockade imposed on Gaza, and allowing the Palestinians to build a seaport in Gaza.
"Our demands are entirely humanitarian. We call on the Palestinian negotiations team not to extend the current ceasefire until our demands are met," he stressed.
Egypt is mediating indirect discussions between Israel and Palestinian factions, including Gaza-ruling Hamas movement, to reach a long-term ceasefire to end a bloody conflict following a 72-hour truce.
Egypt has urged both sides to extend the ceasefire in a bid to win time and tackle all complaints and demands.
Israel stepped up a massive military operation in Gaza July 8 in order to halt Palestinian rocket fire.
The cross-border violence has so far killed around 1,900 Palestinians and 67 Israelis, including 64 soldiers.