JERUSALEM, Jan 12 (Reuters) - Israeli military plans in the Gaza Strip include the option of retaking the narrow stretch of land that separates the coastal enclave from Egypt to try to prevent Hamas from rearming, Western diplomats said on Monday.
Israel intensified its aerial bombardment overnight of the so-called Philadelphi corridor to destroy smuggling tunnels that the Islamist group could use to move longer-ranged rockets, leaders, fighters and funds in and out of the war zone.
Western diplomats, speaking on condition of anonymity, described a ground operation to retake the Philadelphi corridor and parts of the town of Rafah as one of Israel's leading "third phase" options if talks over a ceasefire founder.
A ground operation along the corridor would allow Israel to use bulldozers and sonar equipment to root out tunnels that have yet to be destroyed with air power alone.
Local Palestinian tunnel operators estimated that several hundred of the secret passages have been disabled but that many hundreds of others remained intact.
Holding the 14-km (9 mile)-long Philadelphi corridor could give Israel a bargaining chip in ceasefire talks, diplomats said. Israel has demanded security guarantees from Egypt and Western powers to ensure the tunnels are not rebuilt, but differences remain over how that can be accomplished.
Israeli Defence Minister Ehud Barak stressed the importance of taking "effective action" along the Philadelphi corridor in talks with German Foreign Minister Frank-Walter Steinmeier on Sunday night, but Barak's office provided no other details.
A senior European diplomat said a top Israeli military intelligence official, in a private briefing, acknowledged the risky nature of a ground operation to reoccupy the border zone.
The sandy stretch is only a few hundred metres (yards) wide in some areas, leaving ground troops open to rocket attacks and ambush.
That was a big factor in Israel's decision to leave the corridor when it withdrew troops and settlers from the Gaza Strip for 2005.
The sight of Israeli soldiers, crawling in the dirt along the corridor in a search for the remains of five comrades blown apart by an explosion in 2004, is seared in Israeli memories.
Thousands of Rafah's 150,000 residents have already fled their homes because of the Israeli offensive, which has killed more than 900 Palestinians in 17 days, according to the Hamas-run Health Ministry in Gaza.
Thirteen Israelis -- three civilians hit by rocket fire and 10 soldiers -- have been killed, Israel says.
Many Palestinian homes next the Philadelphi corridor have been shelled. Israel argues that many of them hid entry shafts leading to larger tunnels that cross the border.
Israel could sweep through the Philadelphi corridor and withdraw quickly. But barring a diplomatic solution acceptable to Israel, its ground forces could end up staying there long-term, increasing the risks, diplomats said.
"Some (Israeli leaders) want to do it and some think it's crazy," the European diplomat said.
Before the current offensive, Israel estimated there were hundreds of smuggling tunnels.
Palestinians say the number topped 3,000.
The tunnels include deep passages wide enough to bring through items as large as farm animals and Katyusha rockets. Leading to these are a matrix of smaller access shafts. (Reporting by Adam Entous in Jerusalem and Nidal al-Mughrabi in Gaza; Editing by Samia Nakhoul)
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