The Israeli defence ministry authorised the invasion after Palestinian resistance fighters fired missiles at the Neve Dekalim settlement, injuring six Israelis.
On Friday, seven-year-old Rania Siam died after being struck by Israeli gunfire. Aljazeera learned that the incident took place when Israeli forces fired randomly at Palestinian homes in the town.
Other sources say the child was killed by either automatic gunfire or fragments of tank shells as she played outside her home. Two others were wounded in the incident, the sources said.
'Splashed in blood'
Another report quoted the girl's father, Umar Siam, 50, as saying: "We were having lunch when suddenly there were some explosions and automatic gunfire."
"I felt a pain in my leg, but I was only lightly injured, thank God. Our meal was splashed in blood. We then realised that Rania had been killed by a bullet to the head," he added.
Meanwhile the al-Nasir Brigades, the military wing of the Popular Resistance Committees, has claimed responsibility for the attack on the Israeli town of Sderot.
Witnesses reported explosions
and automatic gunfire by troops
The attack came in retaliation for an Israeli assassination attempt on a leader of the group, Jamal Abu Samhadana on Thursday in Rafah.
Israeli armoured vehicles backed by an assault helicopter stormed the sprawling camp late on Friday from the Neve Dekalim settlement, according to witnesses.
The attack was launched from the northern Gaza Strip where three Palestinians were wounded late on Thursday in an Israeli air strike on the home of a resistance activist - which the Israeli army said had been used to store rockets and other weapons.
Since the September 2000 start of the intifada, 4608 people have been killed including 3571 Palestinians and 963 Israelis, according to an AFP count.