Israel says Palestinian militants have continued to fire rockets from Gaza into Israeli territory.
Israelis living near Gaza live with the daily threat of rockets
Israeli officials say nearly 20 devices were launched on Friday, causing no injuries and little damage.
Late on Thursday, Israel began cutting back on the electricity it supplies to Gaza from the Israeli grid.
On Thursday Israeli strikes killed seven people in Gaza - six of them militants - in operations aimed at halting the rocket fire.
Israel has cut back what it says is 1% of the power it supplies to Gaza.
This is the start of a plan to gradually cut electricity supplies more deeply, in the hope of pressuring Hamas, the militant group that runs Gaza, to end the rocket fire.
"It's their choice. They need to choose if they want to keep investing in rockets and in attacking Israel or if they want electricity from Israel," defence ministry spokesman Shlomo Dror said.
In January Israel cut fuel supplies to Gaza, resulting in the closure of the territory's power station and a blackout in parts of the strip.
Human rights groups, the European Union and the United Nations have criticised the cutting of fuel and electricity supplies to Gaza, already isolated and impoverished, as collective punishment.
Gaza generates about a quarter of its own electricity at a plant run on fuel imported from Israel. The rest comes form the Israeli and Egyptian grids.
Hamas, which does not recognise Israel and opposes the peace process, ousted Palestinian Authority President Mahmoud Abbas's forces from Gaza in June. Mr Abbas remains in control of Palestinian-administered parts of the Israeli-occupied West Bank.
Palestinian Prime Minister Salam Fayyad has said that a lasting peace accord with Israel during this year is unlikely.
In an interview with the Reuters news agency Mr Fayyad said: "The short-term track is not moving as well as it needs to for the political process, for negotiations. In particular, [there is a] lack of an adequately firm commitment with regard to Israeli settlements."
Israeli government spokesman Mark Regev has said Israel remains committed to peace talks with the Palestinians, and to the goal of an agreement by the end of the year.
US President George W Bush has said he believes a peace treaty will be signed before he leaves office in January 2009.
Mr Fayyad is meeting members of the US Congress in Washington on Friday for talks expected to cover aid to the Palestinian Authority.
Mr Fayyad was appointed as PM by Mr Abbas following the setting up of rival administrations in Gaza and the West Bank.