Hamas says it has launched a "big" rocket attack at the Tel Aviv area in central Israel, several of which were intercepted by air defence systems, according to the Israeli military.
Hours later, Palestinian health and civilian officials said dozens of Palestinians had been killed and injured in an Israeli strike on an area in the southern Gazan city of Rafah, where displaced people were sheltering.
Many of the casualties were living in tents at the Tal al-Sultan camp, the Palestinian Red Crescent Society said, adding that the death toll was likely to rise. An official for the Hamas-run media office said 30 people had been killed.
In a statement, the Israel Defense Forces (IDF) confirmed they had carried out an air strike on "a Hamas compound in Rafah," where "significant Hamas terrorists were operating". Acknowledging reports of civilian casualties from a fire ignited by the strike, the army said the incident was "under review".
The Hamas attack on Tel Aviv - the first time in nearly four months that the group has attacked central Israel - came amid an ongoing Israeli military operation in Rafah, which has continued in defiance of a ruling from the UN's top court.
The barrage of up to eight rockets highlights the threat Hamas still poses to people across Israel, although there were no reports of injuries.
It also illustrates the challenges the Israeli army faces as it moves further into southern Gaza to oust Hamas from what it calls its "last major stronghold".
The rocket attack came ahead of further ceasefire negotiations between Israel and Hamas, which are expected to resume next week.
The military wing of Hamas, the Izzedine al-Qassam Brigades, said it was in response to "the massacre of civilians".
But by briefly destabilising the relative normality the residents of Tel Aviv - the economic centre of Israel - had been enjoying in recent months, Hamas may be trying to show its strength ahead of the talks, or trying to derail them.
Air raid sirens also sounded in cities including Herzliya and Petah Tikva. The IDF said its Iron Dome anti-missile system had intercepted three of the eight projectiles.
Most of them landed in open areas, but photos published by Israeli media appeared to show minor damage from shrapnel to a home in Herzliya, where an elderly women lived with her caretaker. Police said two people suffered light injuries.
And in Kfar Saba, north of Tel Aviv, a rocket fell on a field, creating a large crater.
Later on Sunday, sirens also rang out in several border villages in the south adjacent to Gaza, including somewhere residents have returned to live since the Hamas attack on 7 October.
Hamas did not confirm the rockets were launched from Rafah, where fighting has been reported near the Kuwaiti Hospital.
Despite intense international concern, Israel began its offensive in the southern Gaza city about three weeks ago, vowing to destroy what it said were the last Hamas battalions present there.
But the latest rocket attacks are a reminder of Hamas's military capabilities after seven months of an offensive Israel said aimed to eliminate the group.
War cabinet minister Benny Gantz said the rocket launches showed the need for the military to push ahead with its assault.
The UN says more than 800,000 Palestinians have fled Rafah, a city on Gaza's southern edge. About 1.5 million had been sheltering there from the fighting elsewhere in Gaza.
The Palestinian Red Crescent Society said the area which was hit by the IDF airstrike had been designated for displaced people.
But aid groups say that nowhere in Gaza is safe for the territory's estimated two million civilians. They say some Israeli strikes have hit civilians in areas previously designated by the IDF as "humanitarian zones".
Israel's military campaign in Gaza began after gunmen from Hamas attacked Israel on 7 October, killing about 1,200 people and taking 252 others back to Gaza as hostages.
Nearly 36,000 Palestinians have been killed in the war since then, according to Gaza's Hamas-run health ministry.
Source: Fijian Broadcasting Cooperation