A Palestinian father and his 12-year-old son were killed and 10 civilians hurt in an Israeli air strike on a civilian house in Gaza on Friday, medics said.

Bahjat al-Zaalan, 37, died in the early morning strike on his house, which is sited next to a militant training ground, while his son Ramadan died of his wounds in hospital later, the Palestinian medics said.

More than half of the wounded are children, emergency services spokesman Adham Abu Selmiya said.

"Seven children were wounded, two of them very seriously," he said.

The strike, which targeted a Hamas militant training ground nearby, caused the home to collapse, and several other houses nearby were also partly destroyed or burned.

The Israeli army expressed regret that civilians were hurt but blamed Gaza's Hamas rulers for operating within residential areas.

Following the strike, Gaza militants fired 10 rockets at southern Israel, a police spokeswoman said. None of the rockets caused damage or injury.

Israeli media reported Friday night that Israeli top military brass was holding consultations on the latest developments.

The military initially issued a statement that only confirmed it carried out two raids on "terror activity sites," without mentioning the civilian casualties.

But a spokeswoman later expressed regret that civilians were hurt, while noting that "additional explosions at the sites were caused by rockets stored near the targeted terror activity sites."

"The IDF regrets that non-combatants were harmed during the course of this incident," she said, while blaming Gaza's Hamas rulers for "the placement of terror sites in a residential area."

"Ultimately it is the Hamas terror organisation that chooses to operate while embedded within a civilian population using them as a human shield to protect their activity."

The army said the strikes were in response to rocket fire Thursday night on southern Israel, which in turn was in retaliation for an Israeli air raid earlier in the day which targeted a car in Gaza City, killing two militants and wounding another four people.

A police spokeswoman said five rockets had been fired across the border on Thursday. None of them caused damage or injury.

The military said it had on Thursday targeted Issam al-Batsh, a senior member of the Al-Aqsa Martyrs Brigades, an armed off-shoot of the Fatah movement, and a second man.

It said both men had been planning an attack on southern Israel by infiltrating from the Sinai peninsula.

Batsh was also responsible for masterminding "numerous" attacks by militants who infiltrated from Sinai, including a deadly bombing in the Red Sea resort of Eilat in 2007 which killed three Israelis, the military said.

Troops along the Egyptian border have been on very high alert since the weekend over warnings of an imminent attack, fearing another incident along the lines of the one in August, when gunmen infiltrated from Sinai and shot dead eight Israelis and wounded more than 25.

Israel frequently targets militants it says are about to fire rockets over the border, or attacks Gaza in response to such rocket fire, but it also carries out targeted attacks against specific militants.