Gaza militants fired at least 10 rockets towards Israel after an Israeli airstrike destroyed the offices of Hamas political leader Ismail Haniyeh, as air raid sirens wailed across southern Israel.
Haaretz reported that a rocket had hit a home in Sderot as the family hid in a bomb shelter.
Israeli media reported that at least 10 missiles were fired towards the southern Israeli town. There are no immediate reports of casualties.
The latest escalation of violence began when a rocket fired from Gaza struck a home in central Israel, wounding seven people.
Israel has vowed to respond "forcefully," raising the prospect of a fourth war between Israel and Gaza's militant Hamas rulers. However, there were reports that Egypt has brokered a ceasefire.
Hamas' radio station says an Israeli airstrike demolished the offices of Haniyeh.
The airstrike took place moments after Israel fired a pair of warning shots at the office, a tactic that Israel uses to get people to evacuate targeted buildings.
There were no immediate reports of casualties.
Haniyeh had gone into hiding earlier today.
In a written statement, Haniyeh said the Palestinian people "will not surrender" and its militant factions "will deter the enemy if it exceeds the red lines".
- AP