"A large-scale land incursion into Gaza does not serve Israel's security," Peretz told Israel Radio.
Peretz also rejected destroying the infrastructure of Gaza, such as electricity, fuel, water and communications because it "would cause the entire Palestinian population to unit around Hamas," he said.
Israel does not plan to reoccupy Gaza but will continue to target terrorists within Hamas and focus on destroying Qassam rocket launch pads and manufacturing facilities, he said.
"We will not turn down any operative proposal that would help prevent any of our enemies from harming us," Peretz said.
Israel has been trading fire with Palestinians in recent days as internecine strife escalates between Palestinian rival groups Hamas and Fatah. Hamas has claimed responsibility for firing rockets into Israel in recent weeks, the Jerusalem Post reported.
Asked whether Israel planned to assist Fatah in its struggle with Hamas, Peretz said Israel had "an interest that the moderates would win," but declined to elaborate.