Israeli TV showed pictures of the injured soldiers being taken to hospital
An Israeli soldier has been killed and three others injured in a bomb attack on their patrol near the border with Gaza, the Israeli army has said.
Israeli troops entered Gaza backed by helicopters in response and one Palestinian was killed, medics said.
It is the worst violence since Israel's offensive against Hamas in Gaza ended with both sides declaring ceasefires.
It comes as US President Barack Obama's Middle East envoy arrives in the region to seek a more permanent truce.
The US envoy, George Mitchell, is due to talk with Egyptian officials, who have been negotiating separately with the Israelis and Hamas to broker a longer term peace between the two sides.
One Israeli officer was badly wounded in the explosion and the other soldiers were lightly wounded, an army spokesman said.
No Palestinian militant group has said it carried out the attack.
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"This is a severe terrorist attack. It cannot be accepted, and we will respond," Israeli defence minister Ehud Barak was quoted as saying by a military spokesman.
Israeli troops crossed into Gaza looking for the militants who carried out the attack, Israeli defence officials said.
Palestinian residents of Kissufim, the border crossing into Gaza near where the blast hit the Israeli patrol, said they could hear Israeli helicopters circling overhead and the sound of heavy gunfire.
Medics in Gaza said a Palestinian farmer was killed by gunfire.
Israel has closed the border crossings into Gaza because of the attack on the patrol, Israeli officials said, stopping the flow of aid supplies to Gaza's 1.5 million residents.
Aid agencies have been struggling to meet the urgent needs of tens and thousands of displaced, homeless and injured people in Gaza.
Israel and Hamas declared separate ceasefires on 17 and 18 January, ending a three-week Israeli offensive in which nearly 1,300 Palestinians and 10 Israeli soldiers were killed. Three Israeli civilians were killed by rocket fire from Gaza in the same period.
Israel said its objective was to stop militant rocket fire into southern Israel from Gaza.
When Hamas called its ceasefire, it said Israel had one week to fully open all the crossings into Gaza, in order to end an 18-month blockade of the territory that has crippled its economy.
Israel wants guarantees that Hamas militants will not re-arm via smuggling tunnels under the border with Egypt.
Egyptian mediators have been meeting separately with Israel and Hamas, which controls Gaza, to negotiate a more permanent ceasefire.
Mr Solana said the EU is doing all it can to help the situation
George Mitchell, a former US senator who chaired the talks that ended Northern Ireland's troubles as Bill Clinton's envoy in 1998, is now beginning a week-long tour of the Middle East with a stop in Egypt.
He will meet Egyptian President Hosni Mubarak and then visit Israel, the West Bank, Jordan, Turkey and Saudi Arabia, as well as making stops in Europe, said state department spokesman Robert Wood.
He has been charged by Mr Obama with making "concrete progress".
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