Israeli jets have attacked the Palestinian foreign ministry building in Gaza, wounding at least 10 people living nearby.
Israel wants to force Hamas to release a captured soldier
Israel said the pre-dawn raid was aimed at Foreign Minister Mahmoud Zahhar, who it accused of complicity in the capture of an Israeli soldier two weeks ago.
Earlier, Mr Zahhar said negotiations were the only way to end the crisis.
The latest attacks in Gaza came as Israel stepped up action against the Hezbollah militia in Lebanon.
Hezbollah guerrillas captured two Israeli soldiers on Wednesday, and killed eight when Israel sent troops into southern Lebanon on a rescue mission.
Overnight Israeli jets hit targets across southern Lebanon and struck Beirut's international airport, forcing it to close. By Thursday morning a land and sea blockade was in force.
In Gaza, where militants have held Cpl Gilad Shalit captive for two weeks, at least 23 civilians have died since Wednesday morning, including nine in one family whose Gaza City home was bombed.
The leader of Hamas's military wing was among the injured in that attack.
The strike against the foreign ministry occurred at 0130 local time (2230 GMT Wednesday), when the building was likely to have been empty.
Parts of the five-storey building were destroyed, and there was widespread damage to nearby areas.
There were no reports of injuries inside the ministry, but at least 10 people, including several children, were injured in nearby homes, Palestinian medics said.
Israel confirmed the air strike on the Palestinian foreign ministry, and accused Mr Zahhar and Hamas of direct involvement in "terrorism and violence".
"He had knowledge of the recent hostage taking, and he is part of a leadership that has orchestrated rocket attacks, countless rocket attacks, countless missile attacks against Israeli urban areas," said government spokesman Mark Regev.
But the BBC's Wyre Davies, in Gaza City, says that before the attack Mr Zahhar gave a series of media interviews suggesting both sides needed to make a deal.
Speaking after the attack, Mr Zahhar, who has survived previous attempts on his life, appeared unfazed.
"Everybody here is wanted by Israel, everybody is a target, every house is a target and every tree is a target. This is the destructive system built in what is called Israel," he said.
The family of nine killed on Wednesday were hit in an Israeli air strike which targeted the Gaza City home of Hamas military commander Muhammad Deif.
Hamas denied he was in the house at the time, but the BBC has learnt that he was in fact injured in the attack.
Some 80 Palestinians and one Israeli have died since Cpl Shalit, 19, was seized at a border post.
Israel says its offensive is designed to free Cpl Shalit and end rocket attacks on southern Israel by Palestinian militants.