Israeli forces have killed seven Palestinians in the Gaza Strip in an apparently botched undercover raid and ensuing firefight that has threatened to destroy a precarious, unofficial ceasefire.

An Israeli lieutenant colonel was killed and another officer wounded in the operation on Sunday night in south-east Gaza, the first known ground incursion there by Israeli forces since the last war in 2014.

In apparent response to the gunfight, more than a dozen rockets were launched from the Hamas-controlled enclave overnight, and the Israeli prime minister, Benjamin Netanyahu, cut short a visit to Paris, where he had been gathering with world leaders for a first world war commemoration.

In a second round of what appeared to be retaliatory attacks, militants in Gaza fired a barrage of rockets and mortar bombs deep into Israeli territory on Monday afternoon, hitting a bus and severely wounding a 19-year-old, according to Israeli media. The Israeli army said 80 projectiles had been launched.

Bomb sirens sounded in Israeli communities along the frontier and the military said its anti-air defences had intercepted several rockets. Israeli fighter jets began bombing what it said were “terror targets” in Gaza.

Hamas’s armed wing, the Ezzedine al-Qassam Brigades, released a statement overnight claiming Israeli forces had “infiltrated this evening in a civilian car” and had opened fire on a group of its armed men near the city of Khan Younis, killing one of its commanders. Its fighters had given chase as the vehicle sped away, it said.

During the pursuit, Israeli aircraft had “carried out bombardments to cover the withdrawal of this force”, it added.

Medics and Hamas officials said at least seven people were killed, four of them militants, including the Hamas commander Nour Baraka.

Israel had largely abandoned its tactic of targeting senior Hamas officials in recent years. Its military said in a short statement: “During an IDF [Israel Defence Forces] Special Forces operational activity in the Gaza Strip, an exchange of fire evolved.”

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One officer was killed and a second was wounded, it said. The IDF said later that the “special operation yesterday was not intended to kill or abduct terrorists, but to strengthen Israeli security”, without specifying how.

Israeli media reported the operation had been to gather intelligence. The public radio station Kan reported IDF special forces had their cover blown as a result of a technical malfunction, and became pinned down.

Residents in the area where the fighting took place said the car being driven by the soldiers, some of whom were dressed as women, had been stopped by Baraka, who asked for identification. The soldiers shot him with a silenced gun before speeding to an olive grove, where they were extricated by helicopter. Hamas militants in pursuit had been bombed by air, residents said, and Israeli aircraft destroyed the car used by its forces once they had left. Later on Monday a Hamas member in the neighbourhood refused to comment on the accounts.

The incident threatens an unofficial ceasefire between Israel and Hamas. Last week, Israel, which blockades the 140sq mile area, allowed shipments of fuel into the strip to supply electricity plants and reduce crippling power cuts. It also permitted Qatar to deliver $15m (£12m) in aid as backpay for thousands of unpaid civil servants.

Violence has flared frequently on the frontier since Palestinians began weekly protests in March. Israel responded to the movement with lethal fire, killing about 170 demonstrators and injuring thousands more.

Bloodshed has continued for seven months, with Hamas and Israel fighting an on-off war of airstrikes and rockets. Egypt, Qatar and the United Nations have been working to broker a long-term ceasefire.

Netanyahu’s cabinet, dominated by hawkish politicians from rival factions, has been bitterly divided on what policy to implement in Gaza, even as Israeli military commanders have warned against escalations.