The incident came within hours of a rocket attack by Palestinian militants from the northern Gaza Strip which hit an industrial zone on the outskirts of the southern Israeli city of Ashkelon.

There were no reports of any injuries in the attack on the city about 10 kilometres (six miles) north of Gaza.

The radical Palestinian movement Islamic Jihad claimed responsibility for the attack in a statement posted on its website.

Israel has responded to recent rocket attacks with air strikes on Gaza, including raids overnight Saturday which left three Palestinians wounded.

While towns and villages bordering Gaza have been regular targets of Qassam attacks, the notoriously inaccurate missiles have rarely reached Ashkelon, Israel's sixth-largest city.

Prime Minister Ariel Sharon has insisted he would never allow Ashkelon to become a "frontline" city.

Public radio reported Zeev Boim, the hawkish deputy defence minister, saying Israel should retaliate with an artillery bombardment of northern Gaza after warning residents to evacuate their homes.