Air raid sirens have sounded after a loud explosion was heard in the Israeli city of Tel Aviv.
Police said sirens had sounded but could not immediately confirm that anything had hit the Tel Aviv area.
Palestinian militants in Gaza fired two rockets toward the city, Israel's commercial and cultural capital, on Thursday.
One fell in the sea and the other landed in a Tel Aviv suburb, causing no damage or casualties.
The rockets fired at Tel Aviv on Thursday were the first time in about 20 years. Israel responded with airstrikes.
Hisham Kandil (L) and senior Hamas leader Ismail Haniyeh during the visit
The latest explosion follows fresh exchanges of fire between Israel and Hamas militants this morning despite a temporary ceasefire in place for a visit by Egypt's Prime Minister to Gaza.
Several sites in southern Israel have been hit by rockets fired from inside the Gaza Strip and the Israeli air force has responded by attacking a Hamas commander's house.
Medics said the attack killed two people, one of them a child, raising the Palestinian death toll since Wednesday to 21. Three Israelis were killed by a rocket on Thursday.
During his three-hour visit, the Egypt PM Hisham Kandil condemned Israeli action against Gaza as "unacceptable aggression", saying his country will intensify efforts to secure a truce in the conflict.
"This tragedy cannot pass in silence and the world should take responsibility in stopping this aggression," he said at a press conference in Gaza City's Shifa hospital after seeing some victims from an air strike.
"Egypt will not hesitate to intensify its efforts and make sacrifices to stop this aggression and achieve a lasting truce."
His visit comes as 16,000 Israeli army reservists have been called up and heavy artillery has been seen on the Gaza border, increasing the possibility of a ground attack.
Israel has given the green light to the call-up of up to 30,000 army reservists.
Israel Prime Minister Benjamin Netanyahu had earlier said all offensive actions would be called off during Mr Kandil's visit - as long as Palestinian groups refrain from firing rockets across the border.
But the ceasefire quickly dissolved in violence as what Palestinian security sources said was an Israeli air strike hit northern Gaza.
Israel also accused Hamas of violating the agreement but it denied carrying out any strikes.
About 16,000 Israeli reserve troops have been drafted in
Ofir Gendelman, spokesman for Mr Netanyahu, said: "Hamas does not respect the Egyptian PM's visit to Gaza and violates the temporary cease fire that Israel agreed to during the visit."
Sky's Middle East Producer Tom Rayner said: "We've seen at least 4 rockets launched from Northern Gaza in the last 10 minutes - ceasefire may be over before it has even really begun."
Overnight the Palestinian territory suffered a heavy bombardment, with Israeli warplanes hitting targets in and around Gaza City.
"There have been 130 strikes overnight until now," Hamas interior ministry spokesman Islam Shahwan said.
He said the strikes destroyed a building belonging to the interior ministry, while there were also reports that training positions used by various Palestinian militant groups had also been hit.
The Israeli army said 11 Palestinian rockets had been fired from Gaza at Israel overnight.
Meanwhile, European Union foreign policy chief Catherine Ashton said Israel had the right to protect its people against Gaza rocket attacks but urged it to stick to a "proportionate" response.
Deploring the loss of civilian lives on both sides, Ms Ashton said in a statement that "the rocket attacks by Hamas and other factions in Gaza which began this current crisis are totally unacceptable for any government and must stop."
"Israel has the right to protect its population from these kinds of attacks. I urge Israel to ensure that its response is proportionate," she added.
An Iron Dome launcher fires an interceptor rocket near Sderot in the south
Baroness Ashton said she had spoken to leaders in the region to stress the need to prevent more escalation and loss of life.
She also voiced hopes that the Egyptian Prime Minister "will be able to calm the situation".
And Britain's Foreign Secretary William Hague urged both Israel and the Palestinians to make efforts to halt the violence.
But Mr Hague made it clear that he believes Hamas bears the greatest responsibility for the current crisis, as well as the ability to bring it most swiftly to an end.
Mr Hague told BBC Radio 4's Today programme that there had been "a large increase" in rocket attacks on Israel from Gaza over recent weeks.
And he added: "What Israel has done is obviously the Israeli response to that. The thing that would bring this most quickly to an end would be for Hamas to stop launching rockets at Israel.
Palestinian firefighters at the Interior Ministry in Gaza City
"But of course, there are also responsibilities on Israel. I spoke to the Israeli foreign minister yesterday afternoon to urge the Israelis to do their utmost to reduce tension, to take every opportunity to de-escalate the situation and observe international humanitarian law, to avoid civilian casualties.
"Both sides have a responsibility to try to bring this to an end."
Mr Hague said he also spoke to the Egyptian foreign minister last night to urge him to use his country's influence to try to negotiate a "meaningful" ceasefire.
Asked whether Britain would condemn a ground offensive, Mr Hague said: "We will see what the situation is. This depends on the actions of two sides, not just one side."
Prime Minister David Cameron spoke by telephone on Thursday night with Mr Netanyahu to discuss the situation following Israel's assassination of Ahmed Jabari, the Hamas military chief, in a drone strike on his car on Wednesday.
Downing Street said that the PM made clear that Hamas bears principal responsibility for the crisis, but called on Israel to do everything it could to avoid civilian casualties.
And Tunisian foreign minister Rafik Abdessalem will visit Gaza on Saturday, the presidency said, in a statement denouncing Israeli "aggression" on the Palestinian enclave.
The conflict has been intensifying over recent weeks, but flared up dramatically in the wake of the Israeli strikes against senior Hamas figures.
Hundreds of rockets have been fired into Israel, with three people killed in the town of Kiryat Malachi - about 15 miles north of Gaza.
Mr Netanyahu has warned that his country is prepared to extend its operation against Hamas, sparking fears of a repeat of the ground incursion four years ago in which hundreds died.