At least 69 Israeli soldiers were injured when a rocket fired from Gaza exploded in an army camp in southern Israel, the military has said.
The Israeli government has vowed to respond to the rocket strike
The rocket hit an equipment store at the Zikkim training base, sending shrapnel flying through surrounding tents where soldiers were sleeping.
Four of the wounded soldiers were in a serious condition, the military said.
It is the largest number of injuries sustained in a single rocket attack against Israel from Gaza.
The wounded soldiers were all recent recruits undergoing basic training.
Correspondents say both the government and the army will come under strong pressure to retaliate forcefully.
Later, a Palestinian man and three of his children were wounded by Israeli shell fire in Beit Hanoun, Palestinian medics said.
The Israeli army said its ground forces had targeted the area from where militants had launched the rocket that hit the base.
The Israeli military said the Qassam rocket was fired from Beit Hanoun at about 0130 local time (2230 GMT), hitting the training base, about 1km (0.6 miles) north of the Israel-Gaza border.
In addition to the four soldiers said to be in a serious condition, a further seven have been described by the military as moderately wounded.
Twenty-nine soldiers, who suffered only minor injuries or shock, were discharged from hospital on Tuesday morning.
Two Palestinian militant groups claimed responsibility for the attack - Islamic Jihad and the Popular Resistance Committees.
Fawzi Barhoum, a spokesman for the Islamist Hamas movement, which seized control of Gaza in June, called the rocket attack a "victory from God".
A spokesman for the Israeli foreign ministry, Mark Regev, told the BBC that his country would respond to the strike.
"We will act, but I think it's very important to make the point that there is no reason for this," he said.
"We pulled out of the Gaza Strip two years ago, we took down all of the settlements, we pulled out all our military personnel, we ended the military occupation and these extremists who are shooting rockets really have no positive agenda. It's just nihilism."
Militants in Gaza frequently fire Qassam rockets towards southern Israel, many of which land in the town of Sderot.
Qassam rockets are frequently fired from Gaza into southern Israel
Few of the attacks cause casualties but their psychological impact on life in the area has been significant.
Attacks last week on Sderot included one that landed near a crowded day-care centre.
It led parents to pull their children out of school and brought demands for harsh retaliation.
The Israeli Prime Minister, Ehud Olmert, told the country's military to draw up plans to curb rocket attacks from within the Gaza Strip.
It stopped short of calls from some ministers to expand military operations in Gaza, or to cut Israel's supplies of water and electricity to the territory.
The BBC's Joe Floto in Jerusalem says the Israeli authorities will be looking urgently at two questions.
The first and most immediate is why its soldiers were housed under canvas in an area prone to this kind of attack.
The second will be much harder to address - how to prevent Palestinian militant groups from firing their rockets into Israel.
Last year the Israeli army carried out a five-month offensive inside Gaza to do just that.
Hundreds of Palestinians were killed in the operation.
After Tuesday's attack politicians and military commanders will be under intense pressure to respond forcefully, our correspondent adds.