Clashes in Gaza between forces loyal to two rival Palestinian factions, Fatah and Hamas, have continued throughout the night - despite a declared truce.
Fighting has left dozens dead since the end of last year
Hamas rockets have been pounding an area near the offices of Palestinian leader Mahmoud Abbas in Gaza City.
Fatah-linked forces, who earlier stormed a university seen as a Hamas bastion, have laid siege to the interior ministry run by Hamas.
The clashes come as Middle East mediators are due to meet in the US.
Two Fatah members the Palestinian intelligence service were killed by Hamas gunmen early on Friday, Palestinian security and hospital sources said.
On Thursday, six people died when Hamas militants hijacked a convoy delivering supplies to the Fatah-allied security forces.
Three days ago the two factions agreed a ceasefire after 30 deaths this year.
There were reports throughout Thursday of skirmishes in various parts of the Gaza Strip and gunmen returning to the streets.
The people of Gaza City will be fearing that the possibility of civil war is edging closer all the time, the BBC's Alan Johnston in Gaza says.
The assault on the Islamic University in Gaza City began late on Thursday. Its aim was apparently to search for weapons.
It was led by the presidential guard which serves the Fatah party leader, Mr Abbas, security sources say.
At least two people were wounded in the heavy gun battle, and part of the building was on fire.
A Fatah official said seven Iranians were arrested at the university and an eighth blew himself up during the operation. Hamas denied that any non-Palestinians were inside the campus.
The storming of the university is a major psychological victory for the Fatah camp, our correspondent says.
He says the university was founded by Hamas' late spiritual leader Sheikh Yassin, and almost all the major figures in the movement have graduated from it or taught at the campus.
The fact that it has even been targeted reveal the extent in which the latest fighting has gone beyond anything that has been seen in previous rounds of factional violence in Gaza, our correspondent says.
Highly sensitive issue
Earlier on Thursday, gun battles erupted in the centre of the Gaza Strip after Hamas attacked and captured a lorry it said was carrying weapons to the presidential guard, brought in from Israel.
Fatah denied there were any weapons on board the vehicle, adding that the small convoy of lorries was carrying generators and mechanical spare parts.
The reinforcement of the troops around Mr Abbas is a highly sensitive issue, our correspondent says.
He says Mr Abbas favours adopting a softer Palestinian line than Hamas in regard to the confrontation with Israel, and the Israelis and the US are keen to bolster Mr Abbas' forces.
Washington recently agreed to supply the presidential guard with what it said would be non-lethal equipment.
Hamas has denounced the American involvement as blatant meddling designed to provoke conflict in the Palestinian territories.
The latest fighting comes as members of the Quartet of Middle East mediators - the EU, the UN, the US and Russia - are due to meet in Washington.
Washington says it expected the group to reaffirm its commitment to a statement issued a year ago that sets out the conditions the Hamas government must meet to receive international aid.
The Quartet has cut off funding to the Hamas government because of its refusal to recognise Israel and renounce violence.
Washington insists there is still a united position of isolating Hamas, the BBC's Jonathan Beal says.
But Russia's called for the embargo to be lifted , and the UN has questioned whether the current policy can be sustained, our correspondent says.