The showdown between Israel and Hamas is edging closer to war. A Hamas rocket has killed three Israelis and the Palestinian death toll from Israeli air strikes since Wednesday has risen to 15.
Israel said on Thursday that two missiles had been launched towards the Tel Aviv but neither hit it. One of them was reported to have landed in the sea off the city.
The exchanges follow the killing by Israel of the military commander of Hamas in Gaza City on Wednesday.
One rocket has landed on the southern outskirts of Tel Aviv as air raid sirens sounded for the first time in two decades.
Israelis are bracing themselves for a long stay in bomb shelters. The ABC reports schools within 40km of Gaza are closed and those living within 7km of the strip have been told to stay home.
An emergency closed session of the United Nations Security Council was held late on Wednesday to discuss the situation, but it ended with no action being taken.
President Mohamed Mursi of Egypt said Israel's attacks on the Gaza Strip will destabilise the region.
About 200 rockets have been fired into Israel. The army says that 145 of them were destroyed by the Iron Dome interceptor system.
Hamas said seven Palestinians were killed in Israeli air strikes on Thursday. There were no immediate details about the exact locations of the strikes.
So far the deaths are not on the same scale as the last Gaza war almost four years ago.
In a televised statement, Prime Minister Benjamin Netanyahu accused Hamas of a "double war crime" of firing at Israeli civilians and then hiding behind Palestinian civilians. He said their rockets and missiles were deliberately placed in civilian areas.
He added that Israel would take whatever action was necessary to defend itself.
Defence Minister Ehud Barak on Thursday authorised a call-up of 30,000 reservists.
In a broadcast after rockets were fired at Tel Aviv, he said:
"This escalation will exact a price that the other side will have to pay."