At least 52 people and two Israeli soldiers have been killed in one of the worst clashes in the Gaza Strip.

The deaths come after four days of Israel raids and air strikes.

The Jewish state attacked the territory, run by Islamic fundamentalist group Hamas, after an Israeli civilian was killed by a rocket launched from inside Gaza.

Most of the dead have been militants but some civilians, including two children aged nine and ten, have been killed, according to local hospital staff.

The Israeli army has confirmed its forces are operating in northern Gaza and Israel Army Radio reported five soldiers were lightly or moderately wounded in the fighting.

An army spokeswoman said about 20 rockets have been fired into Israel, including three powerful Soviet-designed Grad missiles.

Three Israelis were injured when rockets hit Askelon, a major southern city of 120,000 people.

Israel's Deputy Defence Minister Matan Vilnai has warned Palestininians risk bringing a "shoah" or holocaust on themselves if the rocket attacks do not stop.

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