Israel's armed forces say they have bombed "130 military targets" inside the Gaza Strip, in response to rockets launched from inside the Palestinian enclave. Palestinian sources say there have been at least 24 deaths, including nine children. Israel claims the majority of the victims were members of the ruling Hamas party, or the extremist Islamic Jihad.
An Israeli army spokesman stressed that the Tuesday morning air strikes were "an initial phase" of the response, adding "we are ready for any escalation".
Israeli Prime Minister Benjamin Netanyahu warned Monday that fighting could "continue for some time".
The air raids were in reprisal for a series of rocket attacks launched on Monday afternoon from positions in the east and north of the Gaza Strip.
Hamas had warned of "military action" against Israel unless there was an end to the violence which has seen soldiers of the Jewish state fight Muslims around the Al-Aqsa mosque in east Jerusalem for the past five days.
Those clashes were sparked by a dispute over Israeli settlement-building in the Arab quarter of Sheikh Jarrah.
At least 700 Palestinians have been injured in the Jerusalem violence.
Hundreds of residents of Arab communities across Israel on Monday staged overnight protests against the situation in Jerusalem, one of the largest demonstrations by Palestinian citizens in Israel in recent years.
Why are Israeli police and Muslim worshippers clashing at Al-Aqsa? Before Nakbah: Displaced Palestinians share their memories
Israel's tactics in Jerusalem have drawn angry reactions from across the Muslim world.
Saudi Arabia has condemned what it said were attacks by Israeli forces against the sanctity of Al-Aqsa and the safety of its worshippers. The Saudi foreign ministry called Tuesday on the international community to hold Israeli forces responsible for any escalation.
Separately, the 57-nation Organisation of Islamic Cooperation is holding an emergency meeting of its permanent representatives in the Saudi port city of Jeddah to discuss the tensions in Jerusalem.