Israel Defence Forces (IDF) confirmed the launch of air operation aimed at halting the rocket fire.
"IDF has commenced Operation Protective Edge in Gaza against Hamas, in order to stop the terror Israel's citizens face on a daily basis," said the IDF Spokesman's office in a tweet posted after 1am.
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17 people were injured, including seven children and two women. Two of the injured are critical, Palestinian medics said.
Yesterday, Foreign minister Avigdor Lieberman also snapped a 20-month-old alliance with the ruling Likud Party over the fractious coalition's response to frequent attacks by Hamas.
During the overnight strikes, the IDF hit 18 underground rocket launchers, dozens of homes belonging to Hamas members, three Hamas command and control facilities, and then targets described by security sources as "infrastructure."
Most of the air strikes targeted Hamas, though some targeted other Palestinian militant groups as well that have been involved in recent projectile fire on Israel.
More than 30 rockets hit Israel's southern areas in a span of 30 minutes yesterday and more than 70 were reportedly fired throughout the day.
One Israeli was injured by shrapnel in Ashdod as Hamas launched a heavy barrage of rockets coinciding with the funeral procession for the six Hamas members killed in a tunnel explosion Sunday night.
Nine Palestinian militants, seven from Hamas, have been killed in Israeli air operation in Gaza so far.
Hamas claimed responsibility for the heavy rocket fire, as Code Red sirens blared across the south, in towns and cities including Ashkelon, Kiryat Malachi, Ashdod, Netivot, and Be'er Sheva.
The Iron Dome anti-missile defence system shot down a total of 12 rockets over Netivot and Ashdod.
Israeli Prime Minister Benjamin Netanyahu and senior ministers held a three-hour Security Cabinet meeting yesterday afternoon to discuss the option of an escalation with Gaza, and decided that for the time being Israel will "act carefully, but also steadily increase military retaliation to rockets from the Gaza Strip.
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