Hamas said it has fired a long-range rocket at Jerusalem - the first time the holy city is thought to have been targeted by Gaza militants using such a weapon.
Israeli police said the rocket landed in an open area near Gush Ezion, a collection of Jewish settlements in the West Bank southeast of the city.
The rocket caused no damage or injuries, the Jewish state's army said.
But an attack on what Israelis call their capital marks an escalation by Gaza militants, both for its symbolism and its distance from the Palestinian territory.
Located about 50 miles away from the Gaza border, Jerusalem had been thought to be beyond the range of Gaza rocket squads.
Israel media reported that two rockets had landed outside the city.
The armed wing of Hamas, Al Qassam Brigades, said on Twitter: "Al Qassam Brigades launch two M75 homemade missiles towards occupied Jerusalem."
Twenty-two Palestinians - eight of whom were militants - have now been killed in the violence. Three Israelis were killed by a rocket on Thursday.
Israeli police detain a Palestinian during clashes in Jerusalem's Old City
Earlier, there was a second rocket attack by Palestinian militants on Tel Aviv in 24 hours.
Air raid sirens went off in the centre of Israel's largest city on Friday afternoon and people were forced to scramble for cover. There were no reports of any injuries and it is believed to have landed in the sea.
Police spokesman Micky Rosenfeld said: "We believe it landed off the shores of Tel Aviv".
A witness told AFP that the rocket landed some "some 200 metres (yards)" from the beachfront US embassy.
The attack sparked panic among beachgoers, although several people tried to swim out to the point where the rocket landed, the witness said.
It was the second day in a row that a rocket from Gaza had reached the Tel Aviv area in what Israeli networks said was the first time rockets had been fired at the city since the 1991 Gulf War, when it was hit by Iraqi Scud missiles.
On Thursday, another rocket fell in the sea and the other landed in a Tel Aviv suburb, causing no damage or casualties. Israel responded with airstrikes.
The latest rocket came as the Israeli air force continued a major bombing campaign across Gaza Strip.
Senior Israeli cabinet minister Moshe Yaalon warned that Israel was considering a ground operation in order to stamp out rocket fire.
Hisham Kandil (L) and senior Hamas leader Ismail Haniyeh during the visit
"We are preparing all the military options, including the possibility that forces will be ready to enter Gaza in the event that the firing doesn't stop," he wrote in a series of postings on his official Twitter account.
There were fresh exchanges of fire between Israel and Hamas militants earlier on Friday despite a temporary ceasefire in place for a visit by Egypt's prime minister to Gaza.
Several sites in southern Israel have been hit by rockets fired from inside the Gaza Strip, while a Hamas source said the Israeli air force attacked a Hamas commander's house which resulted in the death of two civilians, one a child.
But Israel's military strongly denied carrying out any attack from the time Mr Kandil entered Gaza, and accused Hamas of violating the three-hour deal.
During his three-hour visit, the Egypt prime minister Hisham Kandil condemned Israeli action against Gaza as "unacceptable aggression", saying his country will intensify efforts to secure a truce in the conflict.
"This tragedy cannot pass in silence and the world should take responsibility in stopping this aggression," he said at a news conference in Gaza City's Shifa hospital after seeing some victims from an airstrike.
"Egypt will not hesitate to intensify its efforts and make sacrifices to stop this aggression and achieve a lasting truce."
His visit comes as 16,000 Israeli army reservists have been called up and heavy artillery has been seen on the Gaza border, increasing the possibility of a ground attack.
Israel has given the green light to the call-up of up to 30,000 army reservists.
Overnight the Palestinian territory suffered a heavy bombardment, with Israeli warplanes hitting targets in and around Gaza City.
Meanwhile, European Union foreign policy chief Baroness Ashton said Israel had the right to protect its people against Gaza rocket attacks but urged it to stick to a "proportionate" response.
She also voiced hopes that the Egyptian prime minister "will be able to calm the situation".
And Britain's Foreign Secretary William Hague urged both Israel and the Palestinians to make efforts to halt the violence.
But Mr Hague made it clear that he believes Hamas bears the greatest responsibility for the current crisis, as well as the ability to bring it most swiftly to an end.
The conflict has been intensifying over recent weeks, but flared up dramatically in the wake of the Israeli strikes against senior Hamas figures.
Mr Netanyahu has warned that his country is prepared to extend its operation against Hamas, sparking fears of a repeat of the ground incursion four years ago in which hundreds died.
Israel's Iron Dome fires an interceptor rocket near Sderot in the south