He delivered a speech after Hamas presented a set of requirements in response to an Israel-supported ceasefire offer.
Mr Netanyahu said that the conversations with the group were unproductive and characterised their conditions as peculiar.
Negotiations are ongoing to achieve a mutually acceptable agreement.
"There is no alternative but to achieve a comprehensive and definitive triumph," Mr. Netanyahu said at a press conference on Wednesday. "The survival of Hamas in Gaza is inevitably linked to the occurrence of future massacres; it is only a matter of time."
Israel anticipated expressing disagreement with Hamas's counter-offer. Still, this statement is an unequivocal rejection, and Israeli leaders saw Hamas's attempt to conclude the conflict on its conditions as entirely unacceptable.
Sami Abu Zuhri, a high-ranking Hamas leader, said that Mr Netanyahu's statements might display political boldness, indicating his will to continue engaging in the fight inside the area.
According to an official source from Egypt, the next round of discussions, facilitated by Egypt and Qatar, is still anticipated to occur on Thursday in Cairo.
The source said Egypt has urged all sides to demonstrate the requisite adaptability to achieve a peaceful resolution.
In sharp contrast to Qatar's characterisation of Hamas's reaction as "positive," Mr. Netanyahu firmly rejected the idea, deeming it "delusional."
Hamas submitted their alternative response to a ceasefire proposition on Tuesday.
The proposed agreement would also increase the provision of sustenance and other assistance to Gaza. Hamas said that discussions to end the conflict would have been completed by the conclusion of the 135-day cessation of hostilities.
Approximately 1,300 individuals lost their lives as a result of the Hamas assaults on southern Israel on October 7th and October 7th of the previous year.
According to the health ministry controlled by Hamas, the war initiated by Israel has resulted in the death of over 27,700 Palestinians and caused injuries to at least 65,000 individuals.
Israeli defence forces to advance into Rafah
On Wednesday, Mr. Netanyahu verified that Israeli troops had received instructions to make preparations for operations in the southern Gaza city of Rafah. This is where a large number of Palestinians have sought refuge to avoid the ongoing conflict.
UN Secretary-General Antonio Guterres cautioned that extending the conflict to Rafah would significantly intensify the existing humanitarian crisis in the city, creating a greater magnitude.
"The prospect of the invasion of Rafah is causing fear among the displaced individuals at the Rafah Crossing, which is located near the border with Egypt".
"We experience fear while sleeping and while sitting." There is a lack of sustenance, and the climate is frigid.
The Israeli leader's remarks undermine the United States' ongoing efforts to achieve an agreement that its senior diplomat, Antony Blinken, has described as "the most favourable course of action," notwithstanding his warning that there is still a significant amount of work to be accomplished.
Mr Blinken said at a press conference on Wednesday that some aspects of Hamas' counter-proposal were unacceptable and could not be considered. However, he appended: "We believe that it allows for the possibility of reaching an agreement, and we will persistently strive towards that goal."
Sharone Lifshitz, whose parents were abducted in southern Israel on October 7th and transported to Gaza, expressed that Mr Netanyahu's refusal of the Hamas ceasefire conditions is very likely to result in the killing of further hostages.
Yocheved, the 85-year-old mother of Ms. Lifshitz, was eventually freed, but her father, Oded, is still being held captive.
"My biological father, who is currently 83 years old, is physically weak and his life expectancy is limited," she said.
"I am uncertain whether the prime minister contemplates him, or if he already considers him as someone who would come back in a coffin."
Mr Netanyahu's position also underscores the persistent and fundamental disparity between the United States and Israel's visions for the future of Gaza.
He is advocating for the establishment of a governing body in which Israel retains complete authority over security matters. Still, local entities, independent of Hamas or any other faction, administer Gaza.
Washington envisions a future where a Palestinian state exists on the horizon.
The pressing inquiry is whether any remnants can be preserved to sustain these negotiations to accomplish another transfer of captives and detainees, as well as a critically necessary cessation of hostilities, to facilitate the entry of further humanitarian assistance into the Gaza Strip.
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