No casualties resulted from the attacks, although an Israeli army spokesman said that one of the rockets had landed in Ashkelon, ten miles north of the border with Gaza, demonstrating Hamas's ability to increase its military range.

The spokesman said that the Israeli raid, near the Bureij refugee camp, was carried out because of the "immediate threat" of abduction of Israeli soldiers by militants using a tunnel 250 metres from the security fence that surrounds Gaza. Israeli forces detonated the tunnel, he said.

But Hamas spokesman Fawzi Barhoum said the rockets were launched "in response to Israel's massive breach of the truce" which was brokered in June with Egyptian mediation.

Mr Barhoum said: "The Israelis began this tension, and they must pay an expensive price. They cannot leave us drowning while they sleep soundly in their beds."

Talal Awkal, a Gaza-based analyst, said that despite the violence, the ceasefire is not in immediate danger of collapse. And yesterday, the Israeli government released statement which voiced their desire to avoid the violence escalating further.

Mr Awkal also said he believed the Israeli raid was aimed at hampering current Egyptian efforts to bring about a reconciliation agreement between Hamas and moderate Palestinian President Mahmoud Abbas's Fatah movement.

Press reports from Gaza City indicated that the Israeli raid, which began late on Tuesday night and ended early yesterday morning, saw Gaza residents crowded into hospitals as ambulances delivered the dead and injured.

The Israeli army claimed that during the overnight raid, Palestinian fighters opened fire on troops from a structure covering the tunnel and, in return fire, a number of militants were hit.

Four soldiers were wounded. However, the Gaza-based Palestinian Centre for Human Rights said that four of the militants were killed when Israeli aircraft acting in support of the ground troops fired two missiles.

Meanwhile, Palestinian protesters have been battling police in a bid to thwart the demolition of a house in a volatile part of East Jerusalem, the predominantly Palestinian area where government-backed Israeli settlers are increasing their presence.

Meir Margalit, of the Israel Committee Against Home Demolitions, said: "This was the most violent demolition I have seen in years. I saw at least ten Palestinians wounded from beatings or being trampled by horses. Palestinians threw stones from every roof."

Micky Rosenfeld, a police spokesman, said the building was destroyed on the basis of a court order and that a number of Palestinians were arrested.

The house was among 88 homes that authorities had planned to raze four years ago to make way for an archeological park being built to illustrate scenes from the Bible.

Mayor Uri Lupolianski had frozen the demolition plans after international protests, but there were concerns that yesterday's demolition marked the start of their gradual implementation.

Mr Margalit said: "We have no doubt that the reason for the demolition was the house's proximity to the City of David."


Hawks and doves circle seeking advantage at election time

FLARE-UPS in the Israeli-Palestinian conflict often have an impact on Israeli elections, boosting the right wing.

Yesterday, renewed images in Israel of communities under Hamas rocket attack and the complaints of Israeli parents that their children's schools lack bomb shelters provided fodder in the current campaign triggered by Ehud Olmert's decision to resign in September. These developments were quickly seized on by Israeli far-right politician Avigdor Lieberman to show he is the toughest on security and that defence minister Ehud Barak is weak.

Mr Lieberman, an immigrant from Moldava who heads the Yisrael Beiteinu (Israel is our home) party is expected to emerge as a crucial coalition partner and cabinet minister if Likud party chairman Benjamin Netanyahu defeats the centrist candidate, Kadima party chairwoman Tzipi Livni, in the February election.

As part of his campaign, Mr Lieberman has also been attacking Egyptian president Hosni Mubarak and stepping up pronouncements depicting Israel's Arab minority as disloyal.

Zehava Galon, a dovish member of the Knesset, stopped short of criticising Israel's raid in Gaza. "It may be that from a security point of view it was important to carry out. I just hope it will not explode the quite and the ceasefire. In general I am not enamoured of entries into Gaza."