Reports claim the attack killed one child and an adult – thus taking the death toll on the Palestinian side to 21 since Wednesday.
The continuation of hostilities comes as Egypt’s prime minister, Hisham Qandil, visited Gaza – and despite a ceasefire ordered for the duration of his visit.
Qandil, who visited a hospital and had discussions with Hamas leaders during his visit, today condemned the Israeli attacks on Gaza, describing them as a “disaster” and calling for the “Israeli aggression to stop”.
“What I am witnessing in Gaza is a disaster and I can't keep quiet. The Israeli aggression must stop,” he said.
However, he also insisted that Egypt would “spare no effort” in trying to broker a ceasefire.
The Israeli military reportedly fired at more than 130 targets overnight, and Hamas militants are said to have responded with 11 rockets from Gaza.
Some reports claim that at least five children were among the dead on the Palestinian side.
Earlier the Israeli army began a draft of 16,000 reservists following the government authorised call-up of 30,000.
There are no reports as yet of any ground offensive.
British Foreign Secretary William Hague urged both sides to make efforts to halt the violence in Gaza, but made clear that he believes Hamas bears the greatest responsibility for the current crisis, as well as the ability to bring it most swiftly to an end.
Downing Street said that the PM made clear that Hamas bears principal responsibility for the crisis, but called on Israel to do everything it could to avoid civilian casualties.
The conflict has been increasing in intensity over the past few weeks, but recently flared up following Israeli strikes against senior Hamas figures.
Hundreds of rockets have been fired into Israel in response, with three people killed in the town of Kiryat Malachi - about 15 miles north of Gaza.
Palestinian militants also fired rockets at Israel's commercial and cultural capital Tel Aviv for the first time.
Mr Netanyahu has said his country is prepared to extend action against Hamas, prompting fears of a repeat of the of the ground incursion four years ago in which hundreds died.
Mr Hague said there had been “a large increase” in rocket attacks on Israel from Gaza over recent weeks.
And he added: “What Israel has done is obviously the Israeli response to that. The thing that would bring this most quickly to an end would be for Hamas to stop launching rockets at Israel.
”But of course, there are also responsibilities on Israel. I spoke to the Israeli foreign minister yesterday afternoon to urge the Israelis to do their utmost to reduce tension, to take every opportunity to de-escalate the situation and observe international humanitarian law, to avoid civilian casualties.
“Both sides have a responsibility to try to bring this to an end.”
Mr Hague said he also spoke to the Egyptian foreign minister last night to urge him to use his country's influence to try to negotiate a “meaningful” ceasefire.