Israel has targeted suspected camps of Palestinian armed groups in the Gaza Strip following a barrage of rockets fired from the territory.
Thursday was the second straight day of rocket attacks and air raids after an Israeli military operation against members of Islamic Jihad.
Islamic Jihad said that an Egyptian-brokered ceasefire had been restored, but the truce, which was to have taken effect at 1200 GMT, was being tested by continued violence.
"Israel Air Force aircraft targeted four terror sites in the southern Gaza Strip and three additional terror sites in the northern Gaza Strip," a military statement released around Thursday midnight (2200 GMT) said.
Al Jazeera's Safwat al-Kahlout quoted Gaza-based medics as saying that three people were injured, one of them seriously, in the Israeli bombardment.
Behind the scenes, Egypt worked to scale back the hostilities, officials in Gaza said.
"An Egyptian-brokered truce went into effect at 2pm (1200 GMT)," Daud Shihab, Islamic Jihad spokesman, told AFP news agency.
Earlier, Khaled al-Batsh, an Islamic Jihad leader, said Egyptian officials had contacted Hamas, which governs Gaza, to "restore the truce" with Israel in force since November 2012.
However, an Israeli defence official said he was "not familiar" with any ceasefire arrangement.
Al Jazeera's Kimberly Halkett, reporting from Washington DC, said the Israeli government was not commenting on the ceasefire.
The Israeli army said five rockets hit Israeli soil on Thursday evening and another two were intercepted mid-air by the Iron Dome missile defence system.
Three rockets had also struck during the morning, he said.
No one has yet claimed responsibility for this rocket fire, but Gaza security sources linked what appeared to be a failed rocket attempt on Thursday night to a Salafist splinter group.
The Gaza sources said the Salafist group may have been behind the explosion of a locally made projectile in the northern town of Beit Hanoun that injured five members of the same family, including a woman and two children.
The confrontation began on Tuesday when an Israeli air raid killed three fighters of Islamic Jihad who had fired a mortar shell at Israeli troops allegedly trying to enter southern Gaza.
Responding to the killings, the Islamic Jihad's armed wing, the Al-Quds Brigades, launched on Wednesday a coordinated barrage of rockets at southern Israel that continued into the night, with the group putting the number at 130.
Israel responded by hitting 29 targets across Gaza overnight, including Islamic Jihad and Hamas bases.
Another seven air attacks on southern Gaza followed during the morning.
Palestinian security officials and witnesses said that the targets were facilities of the Hamas military wing, the Ezzedine al-Qassam brigades, near Gaza City and a base of the smaller Popular Resistance Committees in the southern town of Rafah.
Although there were no casualties on either side on Thursday, the violence was denounced by both Palestinian President Mahmoud Abbas and David Cameron, UK prime minister, in the West Bank town of Bethlehem.
Abbas, after initially being criticised for blaming the escalation solely on Israel, said "we condemn all military escalation including rockets".
The ongoing tit-for-tat attacks amount to the worst confrontation since an eight-day conflict in November 2012 between Israel and Hamas, the Palestinian group which rules Gaza.
Source: Al Jazeera and agencies