Three Israeli soldiers have been killed in a Palestinian militant attack on a Jewish settlement in the Gaza Strip.
Israeli casualties were taken to hospital in Beersheba
The militants infiltrated the outpost at dawn, under cover of fog.
Two of the Palestinians were killed during the gun-battle that followed, and the Israeli army said another who escaped was eventually killed.
Hours later, the Israeli army blew up an abandoned house near Netzarim settlement in Gaza, from where it said militants had launched attacks.
The attack on Morag inflicted the highest number of deaths on the Israeli army in Gaza since May, when six soldiers were killed in a roadside bombing.
The BBC's Alan Johnston in Gaza says the militants struck in the early morning, taking advantage of a blanket of fog that had shrouded the south of the strip.
He says they targeted a military post on the edge of the settlement.
A radical Palestinian group called the Abu Rish Brigades said it was one of three Palestinian groups involved in the assault.
It said the Islamic Jihad movement and the Popular Resistance Committee umbrella group of factions had also taken part.
The attack comes at a time when Israel is engaged in a major debate on its occupation of the Gaza Strip, which it captured during the 1967 war.
Prime Minister Ariel Sharon is planning to pull all 7,000 settlers from Gaza and the Israeli troops that protect them, while maintaining control of Gaza's borders, coastline and airspace.
Overnight, at least 12 people were reported to have been injured when Israeli helicopters fired missiles into the Khan Yunis refugee camp in Gaza, during an incursion by the Israeli army.
The raid came hours after a Palestinian suicide bomber blew herself up in northern Jerusalem, killing two Israelis.
Israeli sources said the army was looking for posts used by Palestinian militants targeting Israelis.