Hamas security says a series of Israeli airstrikes have hit its training facilities and smuggling tunnels beneath the Gaza-Egypt border.
It reported no casualties from the airstrikes early Thursday.
The attacks came hours after a bomb struck a crowded bus stop in central Jerusalem Wednesday, killing one woman and wounding more than 20 other people. No group claimed responsibility for the bombing, but Israeli authorities blamed Palestinian militants.
Israel threatened harsh retaliation for the bombing, the first in Jerusalem in several years.
The bombing came against a backdrop of Palestinian rocket attacks from Gaza and Israeli reprisal raids. The recent wave of violence has threatened to end a lengthy period of relative calm.
State-run Israel Radio said a 60-year-old woman died from the bomb blast at a crowded bus stop.
Yitzhak Aharonovich, Israel's minister of public security, said militants planted the one- kilogram device in a bag on the sidewalk.
Israeli Prime Minister Benjamin Netanyahu said his country would react "aggressively, responsibly and wisely" to a recent wave of Palestinian violence. He issued his statement just hours after the bomb blast.
Netanyahu said he spent the evening huddled with top security officials to discuss the situation. He spoke to reporters just before boarding a flight to Russia, where he said he would discuss Israel's security situation with that country's leaders.
The leaders of the Western-backed Palestinian government in the West Bank also condemned the deadly bombing.
Prime Minister Salam Fayyad denounced it in "the strongest terms," while his boss, President Mahmoud Abbas, travelling in Russia, issued a similar statement.
Gaza militants barraged southern Israel with rockets and mortars Wednesday, drawing retaliatory Israeli airstrikes in a worrisome escalation of the gravest hostilities in the area since Israel went to war in the Palestinian territory two years ago.
Israel PM vows action
Israeli Prime Minister Benjamin Netanyahu vowed decisive action against militants.
"No state would tolerate ongoing rocket fire on its cities and its citizens, and the state of Israel obviously will not tolerate it," Netanyahu said in parliament following the latest escalation.
A text message from Gaza's Hamas rulers said the territory's prime minister had been in contact with militant factions trying to keep the postwar truce from unravelling.
The Islamic Jihad militant group said it fired rockets at four Israeli cities to avenge Israel's killing of eight militants and civilians in Gaza the day before. The group said one of its fighters was killed Wednesday in an Israeli airstrike, and Israeli police said an Israeli civilian was wounded by rocket shrapnel in southern Israel's largest city, Beersheba.
A small faction allied with Gaza's ruling Hamas militant group claimed responsibility for a volley of mortars that struck Israel.
The killing of three children and their uncle Tuesday in what Israel called an errant shelling dramatically escalated the recent flare in violence. Hamas declared a day of mourning Wednesday and appealed to all Gazans to take part in the day's funerals.
Dozens of weeping women dressed in black gathered at the house of three of the victims. Pieces of flesh stuck to the outer wall of the house, which was pocked by shrapnel.
Relatives fired their personal weapons into the air in mourning.
Thousands, meanwhile, participated in the funerals of the four Islamic Jihad fighters killed on Tuesday. Gunmen fired in the air, chanting "God is Great" and "Revenge, revenge."
Israel and Hamas have largely observed a truce since the Israeli military offensive in Gaza ended in January 2009. But with the ceasefire fraying in the past week, Netanyahu threatened to respond vigorously to the stepped-up attacks from Gaza.
"It's possible that blows will be exchanged, it's possible it will continue for some time. But we are very resolved to strike at terror elements and block their ability to hurt our citizens," he said.
Netanyahu did not elaborate. But Israel Radio reported that he planned to huddle with security officials to discuss strategy.
Earlier in the day, Israeli Home Front Minister Matan Vilnai predicted that a military confrontation with Hamas was "only a matter of time."
"We are taking all appropriate steps in this direction," Vilnai told Army Radio.
The Hamas text message said Gaza Prime Minister Ismail Haniyeh had made a round of calls to militant leaders, including Islamic Jihad chief Ramadan Shalah, trying to defuse the violence.
Both Israel and Hamas are thought to be reluctant to engage in another war, after the 2009 conflict killed hundreds of Palestinian civilians and heavily damaged thousands of homes and businesses.
Thirteen Israelis also died, and Israel's image was badly tarnished by allegations of war crimes that the Israeli government denies.
But although the war inflicted heavy damage on Hamas, the Iranian-backed group has replenished its arsenal with bigger and better weapons. Last week, Israel intercepted a cargo ship that it said was loaded with sophisticated anti-ship missiles and other arms sent from Tehran to Gaza.
Over the weekend, Gaza militants launched their heaviest mortar barrage against Israel in years following an Israeli airstrike, stoking a new round of violence.
The mortar shells fired Saturday were the same type as those intercepted last week on the cargo ship, Israel said.