Three Palestinians have reportedly been killed in Gaza, as Israel carried out dozens of air strikes in response to a barrage of rocket fire by militants.
Gaza health officials said a pregnant woman and her daughter, aged one, were killed in the Jaafari area.
A Hamas militant also died in the north. At least seven civilians were injured by rocket fire in southern Israel.
The violence came as the UN and Egypt tried to broker a ceasefire between Israel and Hamas, which dominates Gaza.
UN Middle East envoy Nickolay Mladenov said he was “deeply alarmed”.
“Our collective efforts have prevented the situation from exploding until now. If the current escalation, however, is not contained immediately, the situation can rapidly deteriorate with devastating consequences for all people,” he warned.
This is the third serious flare-up in violence in the past month. On Monday, two militants were killed after an Israeli tank shelled a Hamas border post in northern Gaza.