JERUSALEM, Middle East - Children in Israel's south were heading to school early on Wednesday as an Egyptian-brokered cease-fire took effect, putting an end to a brief yet intense flare-up with Gaza.

The truce, announced on Tuesday by Palestinian groups in the Gaza Strip, came after nearly two days of heavy shelling from both sides that had threatened to descend into full-blown war.

Hamas, the group that rules Gaza, said it would abide by the cease-fire as long as Israel did the same.

Israeli Prime Minister Benjamin Netanyahu and the military did not comment, but the Home Front Command removed late on Tuesday all limitations on southern residents, sending children back to school after two days in shelters.

Hardline Israeli Defense Minister Avigdor Lieberman, who said on Tuesday he did not support stopping the airstrikes, resigned from the government on Wednesday.

He also said his party was quitting Netanyahu's coalition, leaving the prime minister with only a one-seat majority in parliament. Elections are not due until November 2019, but Lieberman's exit increases the likelihood of an earlier vote.

The latest violence, which saw seven Palestinians killed in 24 hours as the Israeli aerial bombardment flattened buildings and sent fireballs and plumes of smoke into the sky, was the worst between Israel and Palestinian militants since a 2014 conflict.

Sirens began sounding in southern Israel late on Sunday, sending tens of thousands running for cover in shelters as around 460 rockets and mortar rounds were fired from Gaza, wounding 27 people, including three severely.

A Palestinian laborer from the occupied West Bank was killed when a rocket hit a building in the city of Ashqelon.

In a statement on Tuesday, Egypt called on Israel to cease its "military action" in Gaza.

The flare-up began on Sunday with a botched Israeli special forces operation inside the Gaza Strip that turned deadly and prompted Hamas to vow revenge.

The clash that resulted from the blown covert operation killed seven Palestinian militants, as well as an Israeli army officer.

Palestinian militants responded with rocket and mortar fire, as well as an antitank missile that hit a bus Hamas said was being used by Israeli soldiers.

UN closed-door meeting

Schools were closed in Gaza and in southern Israel on Tuesday as the two sides warned each other they would respond to any further violence.

Egypt has negotiated ceasefires following previous flareups, while the UN Security Council met behind closed doors on Tuesday to discuss the escalation of violence but there was no agreement on how to address the crisis, diplomats said.

After an Israeli security cabinet meeting that reportedly lasted some six hours on Tuesday, a statement was issued saying the ministers "instructed the (military) to continue its operations as necessary".

Israeli missile defenses intercepted more than 100 rockets from Gaza and most others fell in open areas, though some hit houses and other civilian structures.

"Within two seconds (after air sirens) we heard a huge boom, we saw our curtains flying in the air, windows (broken), and only after a few minutes when we went out, we realized that the missile had hit the building next to us," one man who lives near a block of flats hit by a rocket in Ashqelon said on Tuesday.

Israel hit back with major airstrikes, with targets including Hamas's al-Aqsa TV station and internal security headquarters in Gaza City.

The military said it struck some 160 targets in the enclave.

"What happened was like an earthquake," said Abu Ayman Lemzeni, who lives near the targeted TV building.

Afp - Xinhua - AP