Israeli tanks, helicopters and planes have struck Gaza after an anti-tank missile fired from the Palestinian territory hit a school bus in Israel.
A teenage boy and the bus driver were injured in the strike in southern Israel. The teenager is critically ill. Israeli Defence Minister Ehud Barak ordered the army to act quickly.
Hospital officials in Gaza said a 50-year-old man was killed and 20 other people were injured, including a child of four.
Reports say 45 mortars were fired from Gaza into Israel in the exchanges of fire.
An Israeli plane bombed a compound in northern Gaza belonging to the Islamist Hamas movement. Targets in Gaza City and Rafah were hit.
Helicopters also machine-gunned a target in Gaza for the first time since Israel's offensive more than two years ago, the Reuters news agency reports.
Anti-tank missile
The attackers used an anti-tank missile, the Israeli army said - the first time such a weapon had been used against an Israeli civilian target. The bus had been dropping off schoolchildren near the Nahal Oz kibbutz, and was only carrying one passenger when it was hit, Israeli medical sources said.
Earlier on Thursday, Israel carried out air strikes against smuggling in the south of the Gaza Strip.
Last month saw some of the worst violence since Israel launched Operation Cast Lead in Gaza in December 2008, says the CA's Jon Donnison in Gaza.
In one week in March, at least 10 Palestinians - including several civilians and children - were killed by Israeli attacks.
In the same period, militants in Gaza fired more than 80 rockets and mortar shells into southern Israel.
Hamas had pledged to try to restore a ceasefire that ended on 16 March when an Israeli air strike killed two of its militants in the Palestinian territory.
However, Israel said it had suffered "bouts of terror and rocket attacks".
Despite recent calls for calm, neither side seems to be able to stop firing, our correspondent says. Both say the other started it.
Israel says it holds Hamas responsible for all attacks coming out of Palestinian territory, even if it is other militant groups carrying them out. There are fears that the fighting could escalate.
