The armed wing of Hamas, the Ezzedine Al-Qassam Brigades, has said it will end its 16-month ceasefire following an Israeli artillery attack on a beach in Gaza.
Seven Palestinian civilians, including three children, were killed when artillery shells were fired from Israeli naval ships towards the Sudania area of the narrow coastal territory.
At least 35 others were wounded in the attack.
The victims, including five members of the same family, had been bathing by the coast on what was one of the hottest days of the year in the area.
The Hamas-linked militant group said it would choose 'the right moment and place to strike back with force against the criminal attacks'.
In a statement, Palestinian President Mahmoud Abbas condemned the killings and said the actions of the Israeli military constituted 'a war of extermination and bloody massacres against our people'.
It was a sentiment that was echoed by Palestinian Prime Minister, Ismail Haniyah, who denounced the strike as a 'war crime'.
Mr Abbas has declared three days of mourning.
Russia, which is a member of the international Quartet mediating in the Middle East peace process, said it was 'deeply shocked' at what it said was an 'unacceptable and disproportionate use of force'.
Following the incident, the Israeli army announced that it was suspending its bombardment of the Gaza Strip, pending an investigation.
It said it regretted the loss of life of 'any innocent civilian in the bombardments', which it said were a response to the firing of rockets against Israel.
The seven deaths on the beach brought the overall Palestinian death toll in Gaza to 14 in less than 24 hours.
Hamas PM warns of Palestinian split
The Palestinian Prime Minister, Ismail Haniya, has warned President Mahmoud Abbas that next month's proposed referendum risks an historic split amongst Palestinians.
The Hamas government leader said he feared it could cause a division that 'could take decades to overcome'.
It is understood Mr Abbas may have already overridden the protests of the Hamas government and signed a presidential decree for the first ever referendum, to be held on 31 July.
A formal announcement is expected at a press conference tomorrow.
The referendum document calls for a national unity government, an end to attacks in Israel and the creation of a Palestinian state alongside Israel on land conquered by the Jewish state in the 1967 war.
If accepted, the blueprint would undercut Hamas' long-held policy of refusing to recognise Israel or disavow violence even within Israeli borders.
President Abbas, in contrast, has long championed a negotiated settlement to the conflict with Israel and criticised suicide bombings.
Mr Abbas decided to push ahead with his plans for a referendum after talks aimed at resolving a series of disputes between Hamas and his own Fatah movement failed to make progress.
The two sides have clashed over a range of issues, in particular control of the security services which remains under the remit of Mr Abbas despite Hamas' parliamentary election victory over Fatah in January.
Opinion polls have shown more than 75% of Palestinians back the contents of the blueprint at the centre of the referendum.
The document was drawn up by senior prisoners from all the main Palestinian factions who are being held by the Israeli authorities.
