Israel's military has killed one of the most senior commanders of Palestinian militant group Islamic Jihad in a rare targeted strike in the Gaza Strip, prompting retaliatory rocket fire and fears of a severe escalation in violence.

Key points: Israel said it targeted two Islamic Jihad militants who were posing an immediate threat

Israel said it targeted two Islamic Jihad militants who were posing an immediate threat Islamic Jihad leader Khaled Al-Batsh said Israel executed the attacks in a declaration of war

Islamic Jihad leader Khaled Al-Batsh said Israel executed the attacks in a declaration of war Israeli Prime Minister Benjamin Netanyahu said Israel-Gaza fighting could take time

The Islamic Jihad group said their 42-year-old commander Baha Abu Al-Ata and his wife were killed in their home in Gaza City in a targeted attack.

In the most serious escalation in months, an Israeli missile attack also targeted the home of Islamic Jihad official Akram Ajouri in Damascus, killing two people including one of his sons, Syrian state media said.

Israel declined any comment on that incident.

A destroyed building in Damascus' Mazze neighbourhood following the Israeli air strike. ( AFP: Louai Beshara )

Islamic Jihad leader Khaled Al-Batch said Israel had executed two coordinated attacks, in Syria and in Gaza "in a declaration of war".

Israel said it targeted two Islamic Jihad militants from the group's rocket-launching unit who were posing an immediate threat.

Israeli officials described Abu Al-Ata as "ticking bomb" who was responsible for a string of recent cross-border rocket, drone and sniper attacks and was suspected of planning more.

"We conducted the attack [on Abu Al-Ata] because there was no other choice," Israeli military spokesman Lieutenant-Colonel Jonathan Conricus said.

"I want to emphasise that we are not looking to further escalate the situation."

'Stamina and cool-headedness needed'

Israeli Prime Minister Benjamin Netanyahu said Israel is not interested in escalation. ( AFP: Gil Cohen-Magen )

Israeli Prime Minister Benjamin Netanyahu said fighting with Palestinian Islamic Jihad militants that erupted after Israel killed their top field commander in the Gaza Strip on Tuesday could prove protracted.

"Israel is not interested in escalation, but we will do everything required to protect ourselves," Mr Netanyahu told reporters at military headquarters.

"This could take time. What is needed is stamina and cool-headedness."

The strike led to barrages of rocket fire from the Gaza Strip towards Israel and air raid sirens rang out in various parts of the country while residents ran to bomb shelters.

Israel's military said around 50 rockets had been fired at its territory and air defences had intercepted around 20 of them.

An Israeli missile is launched from the Iron Dome defence missile system, designed to intercept incoming short-range rockets from the nearby Palestinian Gaza Strip. ( AFP: Jack Guez )

A house in Netivot, an Israeli town near the Gaza Strip, was hit and another rocket hit a junction at Gan Yavne near the coastal city of Ashdod, police said.

Israeli medics said they had treated 29 people.

Islamic Jihad said it targeted Jerusalem, Tel Aviv and other cities with rocket fire.

Islamic Jihad is the second most-powerful militant group in the Gaza Strip behind Hamas, to which it is allied.

Israel "bears full responsibility for all consequences of this escalation," Hamas said in a statement, pledging that Abu Al-Ata's death "will not go unpunished".

Schools were closed in both the Gaza Strip and in parts of Israel, including in commercial capital Tel Aviv.

The Israeli army ordered "non-essential" workers in Tel Aviv and central Israel to stay at home like those in the Gaza border region and banned public gatherings.

EU calls for 'complete de-escalation'

The European Union called for a "rapid and complete de-escalation" of the situation.

"The firing of rockets on civilian populations is totally unacceptable and must immediately stop," the EU's diplomatic service said in a statement.

Smoke rises after Israeli forces strike in Gaza City. ( AP: Hatem Moussa )

"A rapid and complete de-escalation is now necessary to safeguard the lives and security of Palestinian and Israeli civilians."

The strikes and rocket fire raised the possibility of a severe escalation between Israel and Palestinian militants in Gaza.

Three wars have been fought between them since 2008, and Gaza has been under a strict Israeli blockade for more than a decade.

The flare-up comes at a sensitive time politically for Israel.

A September 17 general election ended in a deadlock and a new government is yet to be formed. It was the second election since April, when polls also ended inconclusively.

AFP/Reuters