Air raid sirens wailed across Jerusalem Thursday as Palestinian militants continued to fire rockets across Israel, while the country’s military stepped up its offensive against the Hamas-controlled Gaza Strip.

Israel’s military said two rockets fired at Jerusalem were intercepted by the country's "Iron Dome" rocket-defense system, while two fell in open areas. A plume of white smoke following the interceptors could be seen over central Jerusalem.

It was the second rocket attack on Jerusalem since hostilities erupted on Tuesday.

Gaza militants fired more than 140 rockets at major Israeli residential areas Thursday, Israel's military said. Rockets fired at southern Israel damaged homes, infrastructure and spread panic. Israelis rushed to bomb shelters as sirens wailed in major cities. About 5 million Israelis are in range of the Palestinian rocket attacks.

Meanwhile, remnants of a long-range rocket fired from Gaza landed in a gas station in south Tel Aviv on Thursday after being shot down by the "Iron Dome" system. No one has been seriously harmed as the defense system has intercepted at least 70 of the projectiles destined for major population centers.

More On This...

Northeast of Tel Aviv, authorities stopped a car with two passengers and an explosive device inside that they believe was meant for a terror attack, according to the Jerusalem Post.

The car with Palestinian plates was stopped at a checkpoint and security guards found a gas canister hooked up to electric wires inside of it. A robot dismantled the device while the driver admitted to planning a bombing, the Defense Ministry told the newspaper. Both suspects were arrested.

The Israeli military said it had struck a total of some 500 targets throughout the day, focusing on underground tunnel networks and rocket launching sites. In all, the military said it has hit some 860 sites since the operation started Tuesday.

"The military's successes so far have been very significant," Defense Minister Moshe Yaalon said. "We will continue until they understand that this escalation is not beneficial to them and that we will not tolerate rocket fire toward our towns and citizens."

U.N. Secretary-General Ban Ki-moon said the crisis is “one of the most critical tests the region has faced in recent years.”

"Gaza is on a knife-edge,” he told a news conference. “The deteriorating situation is leading to a downward spiral which could quickly get beyond anyone's control."

Israel’s military Thursday said it struck a car in Gaza carrying three Islamic Jihad militants involved in firing rockets, raising the Palestinian death toll to at least 85. The Palestinian health ministry has reported that at least 20 of those deaths have been civilians, but the exact number is not known.

Palestinian authorities told the BBC that 17 people were killed when a house and cafe were hit by an airstrike overnight. Both of those strikes were in the Southern Gaza strip city of Khan Younis. The BBC reported that the cafe was struck while people were inside watching the World Cup semifinal between Argentina and the Netherlands.

Mahmoud Sawali told The Associated Press that he lost at least two of his brothers in the attack.

"We only ask of help from God. Here I have two brothers who are martyrs, and I'm looking for the third," he said.

Separately, the Palestinian health ministry claimed that eight people were killed in an airstrike on a house outside the city. The Israeli military has not commented on either of the reported incidents.

Israel accuses militants of deliberately endangering civilians by using homes and other civilian buildings for cover. The military has also directly targeted the homes of known militants that it says are used as command centers, though it says it contacts the families first to evacuate.

Yigal Palmor, an Israeli Foreign Ministry spokesman, said Hamas is firing rockets from "within houses and streets and neighborhoods which are populated with civilians ... exposing these civilians to retaliation and to backfire."

Diplomats in the Middle East and Washington are searching for a way to resolve the crisis.

Ki-moon, addressing an emergency meeting of the U.N. Security Council, said Thursday the threat of an Israeli ground offensive and "an all-out escalation" in the Gaza Strip is preventable only if Hamas stops firing rockets and mortars into Israel.

Ban again condemned Hamas, which controls Gaza, and Islamic Jihad for a barrage of rockets and mortars. But in a clear message to Israel, Ban said "the excessive use of force and endangering of civilian lives are also intolerable."

Secretary of State John Kerry, in Beijing for a summit with Chinese leaders, said the U.S. is trying to stem the surging violence in a way that allows the Jewish state to continue defending itself from Hamas rocket fire. He called it a "dangerous moment" for the Mideast.

Kerry said he has spoken to Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas.

Lerner said Israel has already mobilized 20,000 reservists for a possible ground operation into Gaza, but for the time being Israel remained focused on maximizing its air campaign. A ground invasion could lead to heavy civilian casualties on the Palestinian side while putting Israeli ground forces in danger.

Israeli security officials say they have prepared different scenarios inside Gaza, ranging from a quick pinpoint operation to a full re-occupation of the seaside strip. Israel withdrew from Gaza in 2005.

"The ground option needs to be the last option and only if it is absolutely necessary. It is a carefully designed plan of action," Lerner said.

In the first indication that cease-fire efforts were underway, Egyptian President Abdel-Fattah el-Sissi said Wednesday that he had held "extensive contacts with all active and concerned parties" to end the fighting.

It said the two sides discussed the "critical conditions and the need to stop all military action, and to stop the slide" toward more violence. It called on Israel to protect Palestinian civilians.

Egypt negotiated a cease-fire that ended the 2012 fighting, but the situation has changed since then. At the time, Egypt was led by the Muslim Brotherhood, a regional movement that includes Hamas. Following a military coup last year, el-Sissi was elected president, and the new government is far more hostile toward Hamas.

The Associated Press contributed to this report.