Gaza City/Jerusalem - Israel continued to mass forces on the borders of Gaza yesterday to reinforce its demand for the immediate release of a captured Israeli soldier while Palestinian security services attempted to track down the kidnappers.

Ehud Olmert, the Israeli prime minister, said he had told the Israeli army "to prepare for a broad and ongoing military operation to strike the terrorist leaders and all those involved".

He said: "It should be clear. There will be immunity for no one."

In Gaza, the militant groups believed to be holding Gilad Shalit, 19, said they would release information about him when Israel frees all its female prisoners and those under 18. Israel insists that the release of its hostage should be unconditional.

Abu Mujahid, the spokesman for the Popular Resistance Committees, who attacked the Israeli positions with Hamas, declined to admit that Corporal Shalit was in their custody. "At this time we have no information on a kidnapped Israel soldier," he said, in what appeared to be a deliberate attempt to be ambiguous.

The soldier is believed to be held by the PRC, and its religious splinter group, the Islamic Army, and members of Hamas. Israeli media broadcast pictures of the military buildup but it seemed to be clear that there was little chance of military action while it was possible to secure the release of Cpl Shalit by other means.

Walid Awad, a spokesman for Mahmoud Abbas, the Palestinian president, said that Palestinian forces were making every effort to locate and free the prisoner. "We are trying to calm the atmosphere so negotiations can continue free of tension," he said. "Everything that can be done is being done to ensure this matter ends well."

Israel insists that it holds Mr Abbas personally responsible for the hostage's safety. But Dan Gillerman, the Israeli ambassador to the United Nations, said that if Mr Abbas is able to secure the corporal's release that could help to rebuild Israeli confidence in the Palestinian leadership.

"Mr Abbas is the president of the Palestinian Authority. This soldier was kidnapped by the Palestinian Authority, into the Palestinian Authority. This is the time for the president of the Palestinian Authority to prove that he does indeed have authority and capability that come with the job and the title he holds," he said.

"If this matter is resolved peacefully maybe this could be the beginning of negotiations and trying to reach an understanding with the Palestinian Authority and Mahmoud Abbas. If it is not, it is just another proof that there is no partner on the other side."

The Israeli army announced on Monday it was holding its own investigation into how eight men tunnelled from Gaza into Israel and were able to kill two men, capture a third and destroy an armoured personnel carrier and a tank.

The militants lost two men before escaping back across the border. The participation of Hamas in Sunday's attack and its involvement in holding the hostage suggest a serious split in the movement, which was renowned for its cohesion and discipline.

Sources close to the Hamas government said they were working to secure the release of the soldier while senior members of Hamas said the movement was becoming disillusioned by their attempt to evolve from a military to a political group.

Yehiyeh Musa, a Hamas member of the Palestinian Legislative Council, was once an enthusiastic advocate of the transformation of Hamas from guerrilla army to political force. Now he feels that the Hamas entry into politics has been destroyed by Europe and the United States.

"The government [Hamas] can go to hell. Europe boycotts us and the United States are against our democracy. The Palestinians are in a big jail and the Israelis have the key," he said. "We have no use for prime ministers or anything like that. The reality is that we are under occupation. We would end the occupation by negotiations but the occupier has no interest in that. The only path is resistance."