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JERUSALEM, May 22 (Reuters) - Israel could kill Palestinian Prime Minister Ismail Haniyeh of Hamas as part of a retaliation campaign for rocket salvoes by the dominant Islamist group in the Gaza Strip, an Israeli minister said on Tuesday.

Israel has escalated its threats against Hamas political leaders and launched air strikes and ground fire that have killed 27 Palestinians during a week-old flare-up in cross-border violence.

Asked if Haniyeh was on Israel's hit-list, Deputy Defence Minister Ephraim Sneh said in a radio interview: "I'll put it like this -- there is no one who is in the circle of commanders and leaders in Hamas who is immune from a strike.

"For what does political Hamas do? It gives the operational approval, if not the actual ratification, to those who are doing the fighting," Sneh told Israel Radio.

"When someone preaches that the State of Israel should be destroyed, he is not in the political echelon, he is a terrorist in a suit."

Hamas's 1988 founding charter calls for the Jewish state's destruction but, since taking power in Palestinian elections last year, the group has proposed a long-term truce with Israel.

A senior Israeli defence official, speaking on condition of anonymity, told Reuters last June that Israel did not hold Haniyeh responsible for the actions of Hamas's armed wing.

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