GAZA CITY - Hamas would consider a "truce" with Israel, but will never recognise the Jewish state, senior leader Ismail Haniya said on Tuesday as thousands of Gazans celebrated the group's 23rd anniversary.

Speaking before flag-waving Palestinians from across the Gaza Strip, Haniya said the Islamist group would never recognise its sworn enemy.

"Let it be understood far and near that after the war, the siege, the internal and external plots: we will not recognise Israel," he told the cheering crowds.

"Our founder Sheikh (Ahmad) Yassin said: Liberate what you can of the West Bank, Gaza Strip and Jerusalem, and where it cannot be liberated, declare a truce," he said, referring to the group's spiritual leader who was assassinated by Israel in 2004.

Ahead of its anniversary celebrations, Hamas reiterated its aim to recover all of historic Palestine from the Mediterranean to the Jordan River.

"We will cede none of it, and we will not recognise the so-called state of Israel," a statement said on Monday, adding that its aim was to make Jerusalem the "capital of the state of Palestine" and pledging to work against Israel's "methods of Judaisation" in the Holy City.