Palestinian militants have fired nearly 150 rockets into Israel, killing three people and striking the southern outskirts of Tel Aviv.
Israel pressed on with a punishing campaign of airstrikes on militant targets across the Gaza Strip. Fifteen Palestinians have been killed and more than 100 wounded in fighting yesterday and today.
As nightfall approached, the fighting showed no signs of slowing, and the rocket attack on the city of Rishon Lezion, by far the deepest target reached by Gaza militants so far, raised the likelihood of an even tougher Israeli response.
Defence officials say Israel is prepared to launch a ground invasion into Gaza if necessary. And Prime Minister Benjamin Netanyahu said the army was prepared for a "significant widening" of its Gaza offensive.
"No government would tolerate a situation where nearly a fifth of its people live under a constant barrage of rockets and missile fire, and Israel will not tolerate this situation," he said.
"This is why my government has instructed the Israeli Defence Forces to conduct surgical strikes against the terrorist infrastructure in Gaza. And this is why Israel will continue to take whatever action is necessary to defend our people."
The fighting, the heaviest in four years, has brought life to a standstill on both sides of the border, with schools cancelled and people huddled indoors.
Israel and Hamas have largely observed an informal truce for the past four years. But in recent weeks, the calm unravelled in a bout of rocket attacks on Israel from Gaza and retaliatory Israeli airstrikes.
Israeli officials say they have not yet decided on whether to launch a ground invasion in Gaza, and it is not clear what would trigger it. But a successful strike on Tel Aviv, Israel's commercial and cultural capital, would mark a significant escalation.
Although the rocket in Rishon Lezion, some 60 kilometres, or 40 miles north of Gaza, landed harmlessly in an open area, it illustrated the significant capabilities that Hamas militants have developed in recent years. Gaza militants had previously hit the city in 2009 fighting as well. Israel launched the offensive yesterday, killing the head of Hamas' militant wing and destroying dozens of rocket launchers.
www.idf.il/english/ (Israel Defence Forces)