Ehud Barack, Israel's defence minister, has warned that the air raids could be followed by a major ground incursion into the Gaza Strip.
"We are ready for anything. If it's necessary to deploy ground forces to defend our citizens, we will do so," Barak's spokesman quoted him as saying on Sunday.
Israeli television has reported that hundreds of infantry and armoured forces were massing on the border of the territory.
Earlier Barak rejected calls for a new truce between the Palestinian Hamas movement and Israel.
"For us to be asked to have a ceasefire with Hamas is like asking you [the United States] to have a ceasefire with al-Qaeda. It's something we cannot really accept," he told Fox News from Tel Aviv.
Ehud Olmert, the outgoing Israeli prime minister, described the assault as a war on the Palestinian faction which took full control of the Gaza Strip in June 2007 after pushing out security force loyal to Mahmoud Abbas, the Palestinian president.
Members of the Israeli cabinet say the attack was in response to an increase in the number of home-made rockets being fired into southern Israel since a ceasefire ended on December 19.
At least one Israel was killed and six other wounded in missile attacks by Palestinian fighters after the raids on Gaza began.
Gaza witnesses reported heavy damage after dozens of missiles were fired from helicopter gunships and fighter jets on about 40 different locations in the strip on Saturday.
Many of the dead in the series of attacks were police officers, including Tawfiq Jabber, the Gaza chief of police.
The toll is expected to rise further, with bodies still lying buried under the rubble of destroyed buildings.
Hospitals, already suffering from shortages due to an 18-month blockade on the Gaza Strip, said they were struggling to cope with the number of injured, which included women and children.
Gaza is densely populated. Its 1.5 million residents were already experiencing shortages in power and basic supplies due to the siege which is widely condemned by human rights movements as a collective punishment.
Ismail Haniya, the Hamas leader in Gaza, called the assault Israel's "ugliest massacre".
|About 40 installations were hit in the first day of attacks by Israel [AFP]
"I call on Palestinians to remain united and together in the face of this crime, in the face of this massacre and continued aggression, targeting our soil and our citizens," he said.
Olmert, speaking in Tel Aviv on Saturday, said the operation would take time and called on Israelis to be "patient".
"The quiet we offered was answered with mayhem. Our desire for calm was answered with terror," he said.
"You are not our enemies. We do not fight against you," Olmert said in a direct address to Palestinians.
"[Terrorist organisations] are disastrous for both peoples. Israel is not fighting against the Palestinian people, and the targets attacked today were chosen with the intent of avoiding civilian casualties."
Jacky Rowland, Al Jazeera's correspondent in Jerusalam, said: "People have been forewarned about further operations of this intesnsity for many days to come, with more sorties flown by Israeli planes and helicopters and more targets in Gaza.
"In response, more than 50 rockets were fired into Israel today. Defence officials are warning that there could be as many as 200 rockets fired every day into Israel in the days to come."
Salam Fayyad, the Palestinian prime minister in the West Bank-based government, condemned the attack and demanded an immediate cessation.
Many leaders added their voices to condemn the onslaught, including Ban Ki-moon, secretary-general of the UN, who called for an immediate cessation of hostilities.
Mousa Abu Morzouz, the deputy leader of Hamas, said: "Nobody in this world can accept what happened and the Israeli aggression ... [we expect] the international community to stand against this and say that it is not acceptable."
Mustafa Barghouthi, the former Palestinian information minister, said: "This is not an attack on Hamas. It is an attack on the whole population and the free will of the people of Gaza."
He accused Israel of committing "war crimes" and demanded that Abbas and his government stop all relations with Israel.
'Only just beginning'
The Israeli army released a statement on Saturday saying "terrorist installations" were hit and that all Israeli pilots returned unharmed.
|A police graduation ceremony in Gaza City was struck by an Israeli attack [AFP]
Avi Benayahu, an Israeli military spokesman said: "The operation against Hamas is "only just beginning".
The air raids follow a breakdown of a six-month-old Israel-Hamas truce earlier this month.
The ceasefire expired on December 19, with Hamas arguing that Israel had violated the truce by preventing vital supplies from entering the Strip.
Egypt has opened the Rafah crossing with the Gaza Strip to receive injured people, Egyptian officials said. Ambulances have been sent to the crossing and two Egyptian hospitals emptied to take in the wounded.
Hamas won control of the Palestinian Legislative Council in elections in January 2005. The international community refused to accept a Hamas-led government, demanding that the faction recognise Israel and renounce violence. Economic sanctions by the EU and US followed.
Hamas took control of the Gaza Strip in June 2007 after bloody street battles against its rival, Fatah.