Israeli warplanes on Sunday bombed a series of contraband tunnels on the border of the Hamas-run Gaza Strip and Egypt.
The tunnels are a lifeline of the Hamas movement and are used to smuggle goods and weapons into the territory. Gaza has been virtually cut off from the outside world since Hamas seized power in June 2007.
The air force says more than 40 tunnels were attacked.
Israel has also threatened to launch a ground assault and is now calling up 6,500 army reservists.
Palestinians say at least 280 people have died in air raids which began on Saturday.
Israel said the strikes were in response to almost daily rocket attacks from Gaza, which intensified after Hamas ended a six-month ceasefire on 19 December.
At the UN, the Security Council called for an end to all violence in Gaza, including rocket attacks from Gaza.
Israel says 110 rockets have been fired into Israel since Saturday.
They have intensified since Hamas ended a six-month ceasefire on 19 December.
Israel is due to hold an election on 10 February.
The operation is called "Solid Lead". The Haaretz daily newspaper said on Sunday that preparations began more than six months ago. The attacks were launched on Saturday, the Jewish Sabbath.
At the UN, the Security Council ended emergency talks with a call for an end to hostilities.
US ambassador Zalmay Khalilzad suggested Hamas held the key to restoring calm, and the "way forward" was for rocket attacks against Israel to stop.
He was implicitly backed from Cairo by Palestinian Authority President Mahmoud Abbas - whose Fatah faction is a bitter rival of Hamas.
Call for intifada
Israeli Defence Minister Ehud Barak has explained the operation in stark terms, saying "the time has come to fight".
In response the exiled leader of Hamas, Khaled Meshaal, called for a new intifada, or uprising, against Israel, while the movement's Gaza leader, Ismail Haniya, called the attack an "ugly massacre".
International reaction to the bombing has been dominated by calls for restraint.
UN Secretary General Ban Ki-moon, Middle East envoy Tony Blair and the French EU presidency all called for a ceasefire.