United Nations Secretary-General Ban Ki-moon called for an end to the new wave of Israeli-Palestinian violence Wednesday, warning that the situation is at risk of becoming another full-blown war.

Meanwhile, hundreds of Palestinians carried bodies through the streets in the Gaza Strip on Wednesday evening as they buried those killed in Israeli airstrikes. On the other side of the border Israelis braced for more rocket fire and soldiers massed on the border.

An Israeli offensive aimed at stopping near-daily Palestinian militant rocket attacks has set off the heaviest fighting between Israel and the Islamic militant group Hamas since an eight-day battle in November 2012, and it is taking a heavy toll on civilians.

Palestinian children played in the rubble of a house that was destroyed by an Israeli strike on Tuesday in the northern Gaza town of Beit Hanoun, while hundreds of angry men carried the bodies of seven people laid out on orange stretchers for their funeral in the Khan Younis refugee camp in the south. Trails of smoke, meanwhile, could be seen as Palestinian militants fired rocket salvos toward Israel.

An Iron Dome launcher fires an interceptor rocket in the southern Israeli city of Ashdod. (Baz Ratner/Reuters)

Palestinian medics say a total of 49 people have been killed in Gaza, including 22 on Wednesday. Of the total dead, medical officials have confirmed at least 15 are civilians and 10 militants, with the remainder uncertain.

No serious casualties have been reported on the Israeli side, but rockets have hit homes, damaged infrastructure and spread panic as air raid sirens wailed over major Israeli cities.

Israel promised to keep up it its military strikes until the rocket fire ends. Meanwhile, troops on the border prepared for a possible ground invasion while also staying on high alert for the possibility of a militant infiltration.

"The army is ready for all possibilities," Prime Minister Benjamin Netanyahu said after holding a meeting of his security cabinet.

"Hamas will pay a heavy price for firing toward Israeli citizens. The security of Israel's citizens comes first. The operation will expand and continue until the fire toward our towns stops and quiet returns."

Offensive could be long-term

The fighting stepped up as Egypt, which often serves as a mediator between Israel and the Palestinians, said it was in contact with both sides to end the violence. It was the first indication since the offensive was launched on Tuesday that ceasefire efforts might be under way.

UN Secretary-General Ban Ki-moon, speaking in New York, said he has requested an urgent meeting of the UN Security Council to address the "troubling and volatile situation."

Ban warned both sides to stop the violence, warning "the deteriorating situation is leading to a downward spiral which could quickly get beyond anyone’s control."

For now, the UN is pushing for a diplomatic solution, while also preparing to respond to "emerging humanitarian needs," related to the crisis, Ban said.

Prime Minister Stephen Harper spoke today with Netanyahu Tuesday, a news release from his office said.

Harper “reiterated Canada's steadfast support for Israel” and the two leaders “agreed that Hamas must end its targeted attacks on Israeli citizens,” the news release said.

The offensive has set off the heaviest fighting between Israel and the Islamic militant group Hamas since an eight-day battle in November 2012. Militants have unleashed rocket salvos deeper into Israeli territory than before, and Israel mobilized thousands of forces along the Gaza border for a possible ground invasion into the Palestinian territory.

Israel's defence minister warned the offensive would be long-term.

"The operation against Hamas will expand in the coming days, and the price the organization will pay will be very high," Defence Minister Moshe Yaalon said.

The strikes came after militants fired more than 160 rockets at Israel, including one that reached the northern Israeli city of Hadera for the first time. The city is about 100 kilometres from Gaza.

"We've seen a clear escalation on both sides," CBC's Derek Stoffel reported from Jerusalem. "There were rockets fired again today at Tel Aviv — the commercial centre of Israel in the centre of the country — and that sent morning commuters running for bomb shelters.

Rockets reach Caesarea

"Later in the day, a few rockets actually were fired beyond Tel Aviv into an area where people thought the rockets couldn't reach, the militants in Gaza trying to prove that they have the technology to strike fear in communities in the heart of Israel."

Rockets fired by Hamas in the Gaza Strip on Wednesday reached Caesarea, Israel, 121 km north. (Yahoo Maps)

The CBC's Sasa Petricic reported today that a rocket had been confirmed landing near Caesarea, 121 km north of Gaza — the farthest yet. That would put most of Israel's population within range of Hamas rockets.

The Israeli army said it attacked more than 160 sites in Gaza early Wednesday, including 118 concealed rockets launching sites, six Hamas compounds — including naval police and national security compounds — 10 militant command centres, weapons storage facilities and 10 tunnels used for militant activity and to ferry supplies in from Egypt. The border between Gaza and Egypt has effectively been closed for months.

Gaza health official Ashraf Al-Kedra said Wednesday's airstrikes killed one militant in south Gaza, an 80-year-old woman, the son, wife and neighbour of a Hamas militant, and three others whose affiliation was not immediately known.

Israel's army said it targeted a militant with the Islamic Jihad militant group who had launched rockets toward Israel. Separately, Islamic Jihad claimed that one of its militants was killed with his mother and four siblings, but Al-Kedra said they were all civilians.

Israeli leadership has stated that they are willing to engage in a full ground invasion of Hamas-controlled areas. (Baz Ratner/Reuters)

Israel and Hamas are bitter enemies and have fought numerous times over the years. But until recently they had been observing a truce that ended the previous hostilities in 2012.

Tensions have been rising since the kidnapping of three Israeli teenagers in the West Bank on June 12. Israel accused Hamas of being behind the abductions, although it provided no proof.

Israel then launched a crackdown on the group's members in the West Bank and arrested hundreds of people. Hamas, which controls Gaza, responded by stepping up rocket fire.

Beach goers run for cover as air raid sirens, warning of incoming rockets, sound in Tel Aviv. (Daniel Bar-On/Reuters)

The situation deteriorated last week after the bodies of the three were found, followed a day later by the abduction of Palestinian teenager in Jerusalem — who was later found burned to death in what Palestinians believe was a revenge attack. Six Jewish Israelis were arrested in the killing.

It was a sharp contrast to the large number that hit Israeli cities the night before, setting off air raid sirens in Jerusalem, Tel Aviv and other areas of the country.

In amateur video obtained by The Associated Press, guests at an outdoor wedding in the city of Holon, near Tel Aviv, ran screaming for cover as a rocket was intercepted in the sky, blowing up. The bride and groom rushed down the aisle as a second rocket whizzed above.

By early Wednesday, air raid sirens sounded in Tel Aviv and Israel's south, and the army said two rockets were apparently intercepted above the central Israeli city by an anti-missile battery. In total, at least seven rockets were fired toward Israel on Wednesday, and the "Iron Dome" anti-missile system intercepted about half of them mid-air, the army said. There were no reported injuries.

Lerner, the army spokesman, told reporters that the military's aim was to take a "substantial toll" on Hamas and to deplete its rocket capabilities. He said the army would gradually ramp up its strikes on Gaza.

"The organization is going to pay for its aggression. It is literally holding us hostage with its rockets," Lerner said. "The country is not willing for this situation to continue."

About 2,000 people attended a funeral for eight Palestinians, including at least one militant, four adults and two children, who were killed Tuesday.

In the attack, an airstrike flattened the home of a Hamas militant in the southern Gaza town of Khan Younis. Israel's military said it had called the home shortly before the airstrike to warn civilians to leave.

Drivers take cover beside their cars on a highway as an air raid siren warns of incoming rockets in Tel Aviv. (Reuters)

A security official said the army has been telephoning homes, or firing small projectiles dubbed "knock on the roof," to warn civilians to leave buildings before demolishing homes. The official said the army also warns militants about such attacks if civilians are with them.

Hamas is far weaker than the last round of fighting with Israel in 2012.

At the time, Egypt was governed by the Muslim Brotherhood, Hamas' close ally. Following its ouster in 2013, Egypt's new government became hostile to Hamas and closed a network of smuggling tunnels used by the group as an economic lifeline, and as a way to smuggle in rockets.

An Israeli government official, speaking on condition of anonymity because he was discussing Israeli tactical strategy, said Israel could make more significant achievements against Hamas now than in previous rounds of fighting.

"Things are different now," the official said. "Their ability to rebuild their arsenal is far more limited."