A senior Israeli military officer and seven militants, including a Hamas commander, were killed late Sunday after a covert operation by Israel inside the Gaza Strip appeared to have been exposed, sparking an exchange of fire, airstrikes and later a barrage of rocket fire.

The hostilities could undermine what had been promising signs in recent days of calm returning to the region after more than six months of heightened tensions.

The Israeli military remained tight-lipped over exact details of the incident Sunday night. Lt. Gen. Gadi Eisenkot, chief of the general staff of the Israel Defense Forces, said in a statement only that a special force was involved in a "very meaningful operation for Israel's security."

The army confirmed that a covert operation was underway at least two miles inside the Gaza Strip when the unit's presence was somehow exposed. An exchange of fire between the troops and a group of Palestinian fighters ensued, turning deadly and leading to the Israeli unit's call for backup from the air.

A statement from the Izzedine al-Qassam Brigades, Hamas's military wing, said that "Zionist enemy special forces," in a civilian car, infiltrated two miles into Gaza, east of the Palestinian town of Khan Younis.

Nour Baraka, a local Hamas leader, was "assassinated," the statement said. It also described how the Israeli soldiers' identities were uncovered and how the unit was "dealt with by our fighters." Witnesses in the area reported Israeli military jets pounding targets as they aided in extracting the soldiers.

Funerals for the Palestinians killed will take place throughout the day, Hamas said.

The Israeli army did not released the identity of the dead soldier due to his involvement in similar undercover operations. They called on the public to help prevent "spreading rumors," after photographs said to be of him and his family appeared to have been leaked on social media.

Speaking on Israeli army radio, military spokesman Ronen Menalis referred to the soldier as Lt. Col. M., calling him a "a real hero." Menalis said that despite being injured, he had been instrumental in ensuring the safe return of the undercover unit. One other soldier was moderately injured, officials said.

Menalis said such covert operations into Palestinian territory happened regularly. Earlier, the army told Israeli media that the goal of this specific operation was not a targeted killing, a practice Israel has utilized in the past to assassinate senior Hamas leaders.

Israel was still on high alert Monday morning, canceling classes in schools in the communities bordering Gaza and suspending train services in the area. Prime Minister Benjamin Netanyahu cut short a trip to Paris over the weekend to return to Israel.

Tensions between Israel and Hamas, the militant Islamist group that rules the Gaza Strip, have intensified. Israel and Egypt have maintained a strict land, air and sea blockade on the Palestinian enclave for more than a decade.

Since March, thousands of Gaza residents have staged weekly demonstrations at the fence with Israel to protest the increasingly harsh humanitarian conditions for the strip's 2 million residents. More than 200 Palestinians have been killed in the protests, mostly by Israeli sniper fire.

Israel calls the protests riots and says they are a cover for Hamas and other militant groups in Gaza to infiltrate into Israel to carry out terrorist attacks in civilian communities along the border.

Three deadly wars fought over the past decade have only exacerbated the situation for both sides, with civilian communities in southern Israel subjected to ongoing rocket fire from the strip. The army said there were 11 rocket rounds were fired overnight Sunday.

More recently, since the protests started, Gaza militants have taken to sending incendiary kites and balloons across the border, igniting fires and destroying vast swaths of agricultural land and nature reserves.

Over the weekend, in a clear effort to reduce the ongoing tensions, Israel permitted Qatar's envoy to Gaza, Mohammad al-Emadi, to enter the strip carrying three suitcases filled with some $15 million in cash. The money to pay the long-delayed salaries of the Hamas-government's civil servants was part of an Egyptian-brokered understanding between Hamas and Israel. The goal was to ease the humanitarian suffering and reduce tensions.

On Sunday, tens of thousands of public servants lined up at post offices across Gaza Strip to finally receive their salaries.

"I don't care about the source of this money," said Mohammed Sultan, 42, a teacher who has not received a full salary for many years.

Hamas leader Basem Naim told The Washington Post that the understanding was part of a process. "Israel will allow the flow of Qatari funds into the Gaza Strip, allow humanitarian projects carried out by international institutions and permit fishing to reach 12 nautical miles."

Speaking at a news conference in Paris on Sunday, Netanyahu said a comprehensive diplomatic solution with Hamas was unlikely, but he indicated that the best-case scenario was to manage tensions and restore a semblance of calm.

"You can't have a political resolution with people who are committed to your destruction," Netanyahu told reporters. "With Hamas, we have to do the minimum possible to maintain our security and prevent the collapse of the humanitarian situation of the 2 million Palestinians held hostage there by Hamas, a terrorist organization."