"We will act according to new rules that ensure we will not be dragged into an unceasing shootout that prevents us from living life as normal in the south," Olmert said.
Olmert warned that there would be a "fierce and disproportionate" Israeli response in the event that rockets continue to be fired from the Gaza Strip into southern Israel or directed Israel Defense Forces soldiers.
The prime minister said that the rocket fire has intensified in the last few days that leaves Israel with no choice but to react in a manner that makes its stance on the rocket fire clear.
"I asked the Defense Minister to instruct the IDF to prepare for the Israeli response that is required under these circumstances. The response will be given at the time, place and avenue that we choose."
Palestinian militants fired at least four Qassam rockets from the Gaza Strip into the western Negev on Sunday, with one landing in between two kindergartens.
Three rockets struck the Eshkol region, two of them landing in open fields and the third close to the kindergartens. A fourth rocket struck an open field in the Sdot Negev Regional Council area. No casualties or damage were reported in any of the strikes.
Later on Sunday morning, Israel Defense Forces soldiers exchanged fire with militants near the Kissufim crossing on the border with the Gaza Strip. No casualties were reported in the incident.
On Saturday morning one Grad rocket struck south of Ashkelon after a Color Red alert sounded in the city.
Foreign Minister Tzipi Livni said there is no need to wait for a response.
"The reaction must be strong and immediate as that is the only way that Hamas will understand the equation has changed," she said.
Defense Minister Ehud Barak said the security establishment had been instructed to formulate a response.
"Hamas received a heavy blow and if needed will receive another one," he said.
The rockets have demonstrated the fragility of a cease-fire that ended Israel's devastating Gaza offensive on January 18.
Israel halted the operation after saying its goals had been achieved. But Hamas declared victory and militants have kept up sporadic attacks.
Since the cease-fire, militants have fired rockets into Israel and killed one soldier in a border attack. Israel has conducted retaliatory strikes and pounded tunnels Hamas uses to smuggle in weapons from Egypt. Israeli forces have also killed three men Palestinians identified as farmers in violence along the Gaza-Israel border.