"We are ready for all scenarios... The army is ready to respond with force if the firing (of rockets) resumes," he said in a meeting with Defence Minister Moshe Yaalon in Ashdod, a statement said.
Netanyahu's warning came as the clock ticked down to a midnight deadline in Gaza and as Palestinian and Israeli negotiators held crunch indirect talks in Cairo.
The aim is to broker a long-term arrangement to halt more than a month of bloody fighting which erupted on July 8, and that has killed 2,016 Palestinians and 67 on the Israeli side, most of them soldiers.