Israel killed two Palestinians in an air strike on Gaza City today, launching what it said would be relentless military action against militants after a suicide bombing at a strategic port.
Witnesses said 14 people, including three children, were wounded as well when three helicopter missiles hit a one-storey house that an Israeli army statement called a "structure where Islamic Jihad terrorists involved in attacks on Israelis were present".
Israel launched the air raid soon after its security cabinet decided on sustained operations, including attempts to kill militant leaders, in response to a double suicide bombing that killed 10 people in Ashdod port on Sunday.
Israeli tanks gathered at Gaza's northern border for a possible push into the strip as Palestinian gunmen took up defensive positions under the cover of darkness.
A pro-Islamic Jihad website quoted a source in the movement as saying the home hit in the air raid belonged to Mohammed al-Kharoubi, a senior member of its military wing, and that he survived the attack. The website did not say if he was wounded.
It said Naser Yassin (27), a member of its al-Quds Brigades, and a passerby, aged 45, were killed.
Israel and Palestinian militants have made clear their intention to bloody one another as much as possible so that each can claim victory after Prime Minister Ariel Sharon's planned evacuation of Jewish settlements in the Gaza Strip.
Sunday's double bombing at Ashdod, 25 km (16 miles) north of Gaza, shook Israel's sense of security because the attackers managed to sneak out of fenced-in territory for the first time in almost three and a half years of conflict.
"This is part of a sustained, targeted and effective operation against terrorists who are continuing their attacks against Israel," a senior Israeli security source said after the air attack. "I am speaking mainly of Hamas and Islamic Jihad."
The source said more such operations were likely soon. "No one will be exonerated. There will be no immunity," he said.
The campaign will be smaller in scale than "Defence Shield", Israel's massive military offensive in 2002, but will last for several weeks. Asked whether an Israeli crackdown would be effective, Justice Minister Tommy Lapid said: "You never finish with terror. You can only fight terror."
Violence has worsened since Mr Sharon disclosed plans to remove settlers as part of unilateral moves in the face of an impasse in peacemaking that would also mean Palestinians losing swathes of land in the West Bank that they want for a state.
Palestinian Negotiations Minister Saeb Erekat said Israel's new military strikes would only perpetuate a cycle of violence. "We call on (Sharon) to return to negotiations, because only this will lead to an end to the cycle of violence," he said.
Mr Sharon reiterated before parliament on Monday that he saw no chance for substantive peace talks as long as militants kept up attacks. He broke off contacts to arrange a summit with Palestinian Prime Minister Ahned Qurie after the Ashdod bombing.
Hamas leader Sheikh Ahmed Yassin said his group could withstand any assault by Israel. "When a Hamas leader is killed, a hundred other leaders arise," he said.
Hamas, the main Islamic group, and the al-Aqsa Martyrs Brigades, part of the Fatah faction which runs the Authority, claimed joint responsibility for the port bombing. They called it revenge for killings of Palestinians in recent army raids.