The Israeli military says it has taken about 80 Palestinians to Israel for questioning following a ground operation in the Gaza Strip.
Israel said the operation targeted "terror infrastructure"
Israeli Prime Minister Ehud Olmert said the army had a "free hand" to target militants in Gaza.
He faces growing pressure to put an end to rocket attacks from the territory.
Three Palestinian militants and a civilian were killed in the incursion on Sunday morning. A fifth person died of his wounds on Monday.
Separately, the military said it had detained 16 suspected militants in overnight raids across the West Bank.
The Palestinian news agency reported raids in Hebron, Tulkarm and in the Jenin area, and said several people were injured when Israeli troops stormed their houses.
Israel and the Fatah faction - in charge of Palestinian-administered areas in the West Bank - are pursuing a renewed peace effort launched at a US-hosted conference last November.
Israel has shunned any engagement with the Islamist militant group Hamas, which controls Gaza, and has continued security operations against militants there.
But despite raids and incursions that have killed scores of Palestinians over past months, there has been no let-up in the rocket attacks.
Backed by aircraft, Israeli ground forces entered Gaza early on Sunday killing a civilian and three members of the armed wing of Hamas.
Some Israelis have demanded more action against rocket attacks
Palestinian health officials said more than 20 people, including civilians, were injured in subsequent clashes before the Israeli forces withdrew in the afternoon.
There have been conflicting reports as to whether the fifth person to die, named as Auni Abu Taha, 42, was a militant or a civilian.
Israeli military officials said the operation was aimed at "infrastructures of terrorist organisations".
The army said one of its soldiers was seriously wounded during exchanges of fire and was evacuated by helicopter to a nearby hospital.
The latest operation comes as Prime Minister Olmert faces mounting domestic pressure over rocket attacks.
Israeli officials say more than 700 rockets and shells have been launched from Gaza since the beginning of 2008, and last week an eight-year-old Israeli boy lost most of his leg in an attack.
In a speech to Jewish American leaders in Jerusalem on Sunday, Mr Olmert said Israel had "a free hand to respond" and attack anyone who has "any kind of responsibility".
"That applies to everyone, first and foremost Hamas," Mr Olmert added.
Mr Olmert also commented on the peace talks with Fatah, which controls the West Bank.
He said the aim of the negotiations was to reach an understanding on "basic principles" for a Palestinian state by the end of the year.