A truce announced by Gaza militants appeared to be fast unravelling on Thursday after 11 Palestinians were killed in seven Israeli air strikes in under 48 hours.

The latest spike in violence was kicked off by an air strike on the southern city of Rafah at around 2:00 am on Wednesday that killed Islamic Jihad militant Ismail al-Ismar, and provoked a flurry of retaliatory rocket attacks despite a days-old truce.

In the latest air strike which hit Jabaliya refugee camp in northern Gaza late on Thursday, the air force killed two militants who were also from the Islamic Jihad armed wing, the Al-Quds Brigades.

The Israeli army confirmed the strike, saying it was in response to a rocket attack on the Erez crossing that had damaged the border terminal "pretty severely," a military spokesman told AFP.

Power had been cut and an access tunnel from the terminal into Gaza sustained heavy damage, he said.

Several hours earlier, Islamic Jihad said it would call off its rocket attacks if Israel first halted its air raids.

"If Israel stops its attacks, the Palestinian resistance will stop firing rockets," spokesman Daoud Shihab told AFP, saying the group did not want "an escalation."

The truce announced on Sunday night had been respected by militant groups including Islamic Jihad until Israel chose to break it, he said.

"The last targeting in Rafah started the new crisis. Israel broke the truce when they killed one of the local leaders of the Al-Quds Brigades. After that, the Brigades answered this aggression," Shihab said.

"The truce is related to Israeli action. If Israel stops their operations, Palestinian resistance will stop firing rockets."

Since early Wednesday, the Israeli air force staged at least seven air strikes, but Intelligence Minister Dan Meridor said the Jewish state was ready to respect the tacit ceasefire as long as there was calm along the border.

"We will not jeopardise the calm if the other side does the same," he said.

Since the strike that killed Ismar, militants have fired around 20 rockets into Israel and another 10 Palestinians have been killed in subsequent air raids.

Robert Serry, the UN's Middle East envoy who had worked with Egypt to set up Sunday's truce, expressed "deep concern" over the threat to the ceasefire and called on both sides to act immediately "to prevent any further escalation."

But Ghazi Hamad, deputy foreign minister in Gaza's Hamas-run government, told AFP the situation could easily spin out of control. "There are no guarantees that the situation is under control," he said.

Hamad expressed "surprise" that Israel had targeted the Jihad leader and said it had been in phone contact with both Serry and the Egyptians "to find a kind of understanding about the truce."

The Islamist movement was trying "to keep the situation calm," he said. "We want a national consensus but some of the factions work alone. It is a big problem."

Wednesday's violence began with the pre-dawn killing of the Jihad leader and several hours later, medics found the body of a 65-year-old man who had died in a raid in central Gaza.

An evening strike on Gaza City killed a second Jihad militant called Atiya Muqat, while an attack on Rafah killed four men working in cross-border tunnels.

In the early hours of Thursday, two men were killed and around 20 wounded in an air strike on the northern town of Beit Lahiya, medics said.

And on Thursday night, two Jihad militants riding on a motorcycle were killed when the air force raided Jabaliya refugee camp north of Gaza City, an emergency services spokesman said.

Another rocket also hit southern Israel, but caused no damage or casualties, police spokeswoman Luba Samri said.

Sunday's truce was declared after four days of bloodshed initially sparked by a coordinated shooting attack on a desert road near the Red Sea resort town of Eilat that killed eight Israelis.

Israel blamed Gaza's Popular Resistance Committees and began an air campaign to take out its leaders. That left 15 Palestinians dead, among them seven PRC militants and two Islamic Jihad operatives.

The PRC denied any responsibility for the Eilat attacks.

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