Israel's government said on Wednesday that it would pursue Egyptian-mediated efforts to reach a truce in and around Gaza, but at the same time ordered its military to prepare for an offensive if the negotiations fail.
Israeli government and security officials said Israel was willing to give the Egyptian mediation efforts about two more weeks to succeed, but that if those efforts failed it would launch an invasion into Gaza.
Major points of contention remain in the ceasefire deal, including Israel's demand to link the truce deal to the release of an Israeli soldier held captive by Hamas for two years and Hamas' demand that Israel open Gaza's border crossings.
The closure has prevented the vast majority of Gaza's 1.4 million people from travelling abroad and led to widespread shortages of fuel, electricity and basic goods.
The house destroyed in the Gaza blast on Thursday belonging to Ahmed Hamouda, a local commander of Hamas's armed wing, in the town of Beit Lahiya.
Seven people were killed in the explosion, including a baby girl, according to Palestinian officials.
Six of those killed were Hamas fighters, emergency services said.
According to Hamas, Hamouda was one of their senior bomb makers.
Following the blast and Israel's denial of involvement, Hamas fired a barrage of rockets and mortar shells into southern Israel, wounding an Israeli woman.
Also in the Beit Lahiya area, two Palestinian fighters were killed in clashes near the fence that separates Israel from the Palestinian territory, Palestinian emergency services said.
An Israeli military spokeswoman said that soldiers had opened fire on a group of Palestinians who approached the fence.
The men killed were from al-Aqsa Martyrs Brigade and the Democratic Front for the Liberation of Palestine, Palestinian groups said.
Later an Israeli shell exploded in northern Gaza, killing three Hamas militants, Palestinian health official said.
The three men were hit by the shell next to the Jebaliya refugee camp, Dr Moaiya Hassanain of the Palestinian health ministry said.