Seven Palestinian militants have been killed and three Israeli soldiers wounded in fierce clashes near a refugee camp inside Gaza.
The Israeli military said it had mounted a raid between the Maghazi camp and the Israeli-Gaza border to stop the firing of rockets into southern Israel.
Militants from Hamas's military wing and Islamic Jihad are among the dead.
Hours later several rockets were fired from Gaza into Israel, one landing close to a primary school.
Earlier this week Israel launched air strikes at Gaza, killing at least 12 people, including a senior militant.
Orchard battle
Israel accused Majed Harazin of leading rocket and mortar attacks against its territory. He has been reported to be the most senior militant to be killed in a year.
Israel described the latest incursion as "a routine operation against terrorist threats".
Its troops, backed by tanks and helicopters, advanced nearly 1km (half-a-mile) into the Gaza Strip early on Thursday morning.
Clashes erupted among orange orchards near Maghazi, a local man said.
Several Palestinians were wounded, including a Reuters television soundman and a Hamas cameraman.
Later on Thursday several rockets were fired across the border from Gaza.
At least one of the missiles landed in the grounds of a primary school in the Israeli town of Sderot and a number of children were treated for shock.
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