The death toll from Israeli airstrikes on the Gaza Strip rose to 32 in three days after Palestinian officials said on Thursday six members of the same family had been killed.
Triggered by the targeted killing of a top militant in Gaza, the two sides have been exchanging fire since Tuesday, and Israel's military said it has recorded more than 350 incoming rockets.
The Israeli military has been targeting what it said were Islamic Jihad militant sites and rocket-launching squads in the coastal Palestinian enclave of Gaza.
"Six members of the Abu Malhous family, including three children and two women, were killed in an Israeli strike on their family home in Deir al-Balah in the southern Gaza Strip," the Palestinian ministry of health said.
The previous day, Israel said it targeted two Islamic Jihad militants preparing to fire anti-tank missiles.
Air raid sirens wailed and fireballs exploded as air defence missiles intercepted rockets, sending Israelis rushing to bomb shelters.
In Gaza, residents surveyed damage and mourned the dead outside a mortuary and at funerals.
UN envoy Nickolay Mladenov arrived in Cairo on Wednesday afternoon, airport officials said, following reports he was to hold talks aimed at halting the fighting.
The UN and Egypt have been instrumental in mediating previous ceasefires between Israel and Gaza-based militants.
But a source close to the discussions warned the risk of further escalation remained high.Israeli Prime Minister Benjamin Netanyahu said Islamic Jihad must stop its rocket attacks or "absorb more and more blows".
Islamic Jihad spokesman Musab al-Barayem said the group was not interested in mediation for now as it retaliated over the killing of one of its commanders.
Israel killed senior Islamic Jihad commander Baha Abu al-Ata and his wife Asma in a targeted strike early Tuesday, prompting barrages of tit-for-tat rocket fire and air strikes
According to Israel, Ata was responsible for rocket fire at Israel as well as other attacks and was planning more violence, with the military calling him a "ticking bomb."
The flare-up raised fears of a new all-out conflict between Israel and Palestinian militants in Gaza, who have fought three wars since 2008.
A total of 32 Palestinians had been killed by Thursday morning, including Ata and his wife as well as three children, according to Gaza's Hamas-run health ministry.
There have been no Israeli deaths, though damage has been caused and one rocket narrowly missed cars on a busy highway.
Israeli medics said they had treated 48 people with light wounds, while schools were closed in areas near the Gaza border for a second day running.
Schools in the blockaded Gaza Strip, an enclave of two million people, have been closed since Tuesday.
In a sign it was seeking to avoid a wider conflict, Israel's announced targets were confined to Islamic Jihad sites and not those belonging to Hamas.
It normally holds Hamas, the Islamist movement that rules the Gaza Strip, responsible for all rocket fire from the enclave as the territory's de facto.
"For the first time in the current era, Israel drew a distinction between Hamas and Islamic Jihad," commentator Ben Caspit wrote in Israeli newspaper Maariv.
"By so doing, Israel deviated from its iron-clad principle that Hamas, as the sovereign power in Gaza, has to pay the price for any action taken by anyone in the Gaza Strip. That is now no longer the case."
Ronni Shaked of the Harry Truman Research Institute for Peace in Jerusalem agreed that the move was a first for Israel.
Now the fight is just against the Islamic Jihad, not against Hamas," he said.
Islamic Jihad is the second most-powerful militant group in the Gaza Strip after Hamas and has taken responsibility for rocket fire.
Hamas, however, said it would not abandon its ally.
"As long as the Israeli warplanes bomb the Gaza Strip, the resistance will respond to the Israeli aggression and defend the Palestinian people," a joint statement from Gaza militant groups said.
The flare-up comes at a politically sensitive time for Israel, with no new government in place after September elections ended in deadlock.
Gaza City, Palestinian Territories | AFP