Israel's military killed a commander of the Palestinian militant group Islamic Jihad in a strike on his home in the Gaza Strip today, triggering exchanges of fire and fears of a severe escalation in violence.

The targeted strike led to barrages of retaliatory rocket fire into Israel followed by Israeli air raids, and Gaza's health ministry reported five people killed and 30 wounded in the Palestinian enclave.

Israel said it targeted Islamic Jihad militant sites as well as rocket-launching squads in the raids.

The rocket fire into Israel caused damage and several injuries, with at least one rocket hitting a house and another narrowly missing passing cars on a highway. 

A factory in the city of Sderot was also hit, sparking a fire.

Israeli medics said they had treated 39 people.

Reports that a separate strike targeted an Islamic Jihad member in Damascus added to the day's tensions.

Islamic Jihad confirmed one of its officials, Akram Ajouri, was targeted in Damascus, with Syrian state news agency SANA reporting an Israeli strike had hit Ajouri's home, "killing his son Muadh and another person".

Israel did not comment on that strike.

The initial Israeli raid in Gaza early today, thought to have been carried out by a drone, killed Islamic Jihad commander Baha Abu Al-Ata, 42.

Islamic Jihad confirmed his death along with that of his wife.

Israel blamed Ata for recent rocket fire into its territory and said he was preparing further attacks.

As the retaliatory rocket fire followed, air raid sirens rang out in various parts of Israel as residents took cover in bomb shelters.

Israel's military said this morning that around 50 rockets had been fired at its territory and air defences had intercepted around 20 of them, but that number increased throughout the day.

Video spread online showing the rocket that hit the highway at Gan Yavne in Israel's centre, narrowly missing cars.

Islamic Jihad, allied to Hamas, the Islamist movement that rules Gaza, claimed responsibility for rocket fire from the strip.

Schools were closed in both the Gaza Strip and in parts of Israel, including in the commercial capital Tel Aviv.