The criticism is made all the more searing because Gen Ya'alon is not known for being soft on the Palestinians. As deputy chief of staff, he called the latest conflict the second stage of Israel's independence war.
The general warned that the continued curfews, reoccupation of towns and severe restrictions on the movement of Palestinians, combined with the economic crisis they have caused, were increasing the threat to Israel's security.
'In our tactical decisions, we are operating contrary to our strategic interest,' Gen Ya'alon said. 'It increases hatred for Israel and strengthens the terror organisations.'
Earlier this week, army commanders in the West Bank told the military administration in the occupied territories that Palestinians had reached new depths of despair, which was fuelling a hatred for Israeli that had little to do with the propaganda so often blamed by the government.
'There is no hope, no expectations for the Palestinians in the Gaza Strip, nor in Bethlehem and Jericho,' said Gen Ya'alon.
The commanders warned that the situation was strengthening Hamas, a view the Israeli intelligence services agreed with. But while the army sees the solution as easing most oppressive elements of occupation, the Shin Bet argues that rising support for Islamist groups is a reason to keep the clampdown in place. This is the preferred option of the defence minister and Gen Ya'alon's predecessor as army chief of staff, Shaul Mofaz.
Mr Sharon and Mr Mofaz were reportedly furious at the general's statements and initially demanded that he retract them or resign. But the political establishment apparently decided it would be better to deride Gen Ya'alon.
Despair? I thought we had no idea of why the Palestinians behave as they do. I thought they hated what we are, not what we do. Now we have the head of the IDF admitting there may even be some logic to Palestinian behavior.