The Hamas move came after Israel's military killed two Palestinians in Gaza on yesterday, raising the toll in the deadliest clashes since a devastating war more than two years ago.

A truce declared by Palestinian armed groups in the enclave unravelled even before it could take hold as militants fired dozens of projectiles into southern Israel and the military retaliated.

"The (Hamas) Interior Ministry has decreed a state of emergency. All security forces must work 24 hours a day along with the civil defence and medical services to protect and save inhabitants taken as targets by the Zionist occupier," Ministry spokesman Ihab al-Ghussein declared.

The armed confrontation between Israel and Hamas, the worst since 2009, has cost the lives of 18 Palestinians since Thursday in the Gaza Strip. They included Tayssir Abu Sneneh, a head of Hamas's armed wing the Ezzedin al-Qassam Brigades.

The Israeli army said in a statement that Sneneh was implicated "directly and physically" in the abduction of Israeli soldier Gilad Shalit and had recently been told to carry out "a terrorist attack from the Sinai Desert, using rockets, against the Israeli city of Eilat."

Shalit, 24, who has French nationality, was captured in Israel in June 2006 by three armed Palestinian groups, one coming under Hamas.

The violence continued yesterday with Palestinians firing some 50 salvos of projectiles at Israel, and Israelis responding with air raids.

An Israeli raid in eastern Gaza City yesterday evening killed a member of the Nasser Brigades, the military wing of the Popular Resistance Committees, and wounded two other Palestinians, a medic said.

Israeli tanks wounded another Palestinian in the strip's north.

Yesterday morning, an Israeli tank round killed a Palestinian and wounded a second in an eastern neighbourhood of Gaza City, medics said without specifying whether the casualties were militants or civilians.

The deaths took to 18 the number of Palestinians killed, including at least six militants and a 10-year-old boy, since an anti-tank round was fired at an Israeli school bus near kibbutz Nahal Oz, close to Gaza, on Thursday.

At least 57 Palestinians were wounded, 12 seriously, medics said.