Gaza militants on Monday fired nine rockets at southern Israel, one of which exploded next to a house, police said, shattering an overnight calm even as Cairo sought to broker an end to 24 hours of bloodshed.
Police spokesman Micky Rosenfeld said nine rockets had hit Israel, all of them fired after 7:30 am (0530 GMT).
"Seven were fired at the Negev (desert) region and two towards the Ashkelon (coastal) area," he told AFP, adding that one had landed in the yard of a house in Netivot.
Medical sources said 26 people had been treated for shock in the town.
The latest rocket attacks put an end to what had been a quiet night on the Israeli side of the border, with the army saying there had been no launchings since Sunday night.
In Gaza, the Israeli military carried out series of air strikes, targeting "a terror tunnel and a weapons facility" in the north and a rocket-launching site in the south, the army said. There were no reports of injuries.
The relative quiet came after Cairo stepped into its usual role as mediator on Sunday night to try to broker a truce, Egyptian security sources told AFP after 24-hours of cross-border fighting left six Palestinians dead, and saw armed groups firing more than 110 rockets at Israel, injuring eight.
Palestinian officials confirmed the truce initiative and said the two main militants groups in the Gaza Strip, Hamas and the Islamic Jihad, had affirmed their readiness to observe it "provided Israel commits to doing the same."
The latest flareup began on Saturday evening, when militants fired an anti-tank missile at an army jeep, injuring four soldiers.
The military hit back, killing six Palestinians, including two militants and two minors, and injuring more than 30.
Militant groups then fired more than 110 projectiles in southern Israel, injuring four people in the town of Sderot near the border.
Talk of a truce surfaced as Israel warned Gaza's Hamas rulers that it would strike back with "ever-growing intensity" if the rocket attacks were to continue.
"Hamas is responsible for the rocket fire and all other attempts to harm our soldiers and civilians, even when other groups participate. And it is Hamas that will pay the heavy price," said Defence Minister Ehud Barak.
"We will strike with an ever-growing intensity."
The spike in violence, which comes as Israel is in the middle of an election campaign, raised the spectre of a broader Israeli military operation in Gaza, along the lines of its devastating Operation Cast Lead over New Year of 2009.
"During the last two days, the IDF (Israel Defence Forces), on my instructions, has been evaluating the host of options for harsher responses against Hamas and the other terror organisations in Gaza," Barak said.
Prime Minister Benjamin Netanyahu warned that Israel was "prepared to escalate" its response to Palestinian rocket fire.
"The army is acting and will act forcefully against the terror organisations in the Gaza Strip," Netanyahu told his cabinet.
"The world must realise that Israel won't sit by idly in the face of attempts to attack us," he said. "We are prepared to escalate our actions."
In late December 2008, just six weeks before the last general elections, Israel launched a 22-day operation in Gaza to stamp out persistent rocket fire, which claimed the lives of 1,400 Palestinians -- half of them civilians -- and 13 Israelis, 10 of them soldiers.