The Israeli military has confirmed carrying out air strikes over the Gaza Strip following a series of deadly attacks in southern Israel.
At least six people, including a senior militant, were killed in the air strikes, Palestinian sources said.
Earlier, Israeli officials promised a strong response after attacks on vehicles near Eilat left seven dead.
Israeli officials said Gazan militants were responsible, although Gaza's Hamas government denied involvement.
Palestinian sources told the BBC that four members of the Popular Resistance Committees (PRC), a faction in Gaza that is loyal to Hamas but sometimes operates separately, had been killed in the air strikes.
These included Kamal al-Nairab, the group's top commander, they said.
Palestinian sources, also quoted by Reuters, said two people had been killed in a house in Rafah after Israeli drones - often used for air strikes - were heard overhead.
The attacks earlier in the day near the southern Israeli city of Eilat began when gunmen opened fire on a bus.
Israeli officials said two other vehicles were then hit nearby - one by a rocket and one by an explosive device.
They said that the attacks left seven Israelis dead and that a number of gunmen were killed in an ensuing firefight.
'Force and determination'
Israeli Prime Minister Benjamin Netanyahu called it a "grave incident".
Israeli Defense Minister Ehud Barak said earlier: "The real source of the terror is in Gaza and we will act against them with full force and determination."
The US, the EU and the UN condemned the attacks in Israel.
"We condemn the brutal terrorist attacks in southern Israel today in the strongest terms," the White House said in a statement.
A UN spokesman said Secretary-General Ban Ki-moon was "concerned at the risk of escalation and calls for all to act with restraint".
Israeli officials said the men who attacked the vehicles near Eilat had came from the Gaza Strip and had entered Israel through Egypt's Sinai desert.
There has been growing concern about a decline in security in Sinai since Egyptian President Hosni Mubarak was toppled in February.
"This violence only underscores our strong concerns about the security situation in the Sinai Peninsula," said US Secretary of State Hillary Clinton.
"Recent commitments by the Egyptian government to address the security situation in the Sinai are important and we urge the Egyptian government to find a lasting resolution."