An Israeli air strike on a house in Gaza City has killed one person and injured several including young children, Palestinian sources say.
The strike on the Gaza City house left a large crater
Israel said Hamas militants used the building as an ammunition depot and were preparing rockets there.
A second Palestinian died in northern Gaza under helicopter fire.
The Economy Ministry of the Hamas-led Palestinian government was also hit by air strikes and badly damaged but there were no reports of casualties.
Israeli forces have been attacking targets in the Gaza Strip for nearly three weeks since the capture of a soldier.
They have said they will not relent until Cpl Gilad Shalit is released and militants halt rocket attacks against Israel.