More than 120 rockets have been fired on Israel from the Gaza strip in the past 24 hours.
The Israeli Defence Force said it had struck more than 160 Hamas terror bases in Gaza in response, killing 20 Palestinians.
The IDF said its current ‘Protective Edge’ operation would continue until firing at Israel stops.
Hamas said it had targeted Israeli population centres including Haifa, although a long-range missile aimed at the city did not strike its target.
Iranian-built M302 rockets were used by the Palestinian group, with one landing 116 kilometres from its launch site near to the northern Israeli town of Hadera.
In the space of one hour on Tuesday evening, at least 45 rockets were fired on Israel.
The Iron Dome missile defence system successfully stopped the majority of the missiles hitting civilian targets in southern and central Israel.
IDF spokesman Peter Lerner said: “Last night, the majority of Israel’s population was put under immediate danger as Gaza terrorists fired rockets at major Israeli cities.
“Despite the turmoil, we will not forget that residents of southern Israel have been suffering from unremitting fire for several years.
“Operation ‘Protective Edge’ will prolong until the fire at Israel ceases, and once we succeed in significantly depleting terrorist infrastructure in the Gaza Strip.”
On Tuesday evening air raid sirens sounded in Jerusalem – the first time Israel’s capital city has been targeted by rockets in more than 18 months.
A group of suspected Hamas gunmen attempted to infiltrate Israel via the beach near Zikim, north of Gaza.
An IDF unit engaged them in a firefight, killing at least two terrorists.
The Israeli military has now called up 40,000 reservists and massed supplies and arms near the border with Gaza as the government continues to consider a land operation.