Israeli fighter jets dropped two bombs on the house of an Islamic Jihad member, after giving residents a warning.

The latest flare-up in tensions began with a surprise attack on Friday by the Israeli army, which killed a senior commander of the PIJ, ending more than a year of relative calm.

Palestinian militants have retaliated by firing at least 200 rockets at Israel - most of them intercepted, setting off multiple air raids sirens and sending people running to bomb shelters. There were no reports of serious casualties, the Israeli ambulance service said.

The Palestinian Ministry of Health in Gaza said 36 people have lost their lives in the latest round of fighting, including a five-year-old girl, and a 79-year-old woman. It said 253 civilians had been wounded, and the United Nations reported 31 families in Gaza had been left homeless.

The UN's humanitarian coordinator in the occupied Palestinian territory, Lynn Hastings, said the humanitarian situation in Gaza "is already dire and can only worsen with this most recent escalation".

"The hostilities must stop to avoid more deaths and injuries of civilians in Gaza and Israel," she said, urging both parties to respect the principles of international humanitarian law.

Israel stopped the planned transport of fuel into Gaza shortly before it struck on Friday, crippling the territory's
lone power plant and reducing electricity to around eight hours per day.

Ms Hastings said service facilities such as hospitals, schools, warehouses, and designated shelters for internally displaced persons are at risk of being unable to operate.

She called on the Israeli authorities and Palestinian armed groups to allow the UN and associated humanitarian personnel to safely cross borders in order to bring in fuel, food, and medical supplies.

"We stand ready to work with all sides to ensure humanitarian needs are met," she said.

Intensive talks to calm the situation

The fighting comes after days of tensions following the arrest of a senior Islamic Jihad militant in the occupied West Bank on Monday, drawing threats of retaliation from the group.

Israel had closed roads around Gaza earlier this week and sent reinforcements to the border, in anticipation of retaliation.

Egypt said it was engaged in intensive talks to calm the situation, and further escalation would largely depend on whether Hamas, the Islamic militant group which controls Gaza, would opt to join the fighting.

The PIJ is smaller than Hamas but shares a similar ideology, with both groups opposing Israel's presence.

An Egyptian intelligence delegation headed by Major General Ahmed Abdelkhaliq arrived in Israel on Saturday and would be travelling to Gaza for mediation talks, two Egyptian security sources told Reuters.

Islamic Jihad signalled no ceasefire was imminent. "The time now is for resistance, not a truce," a group official told
Reuters.

The Western-backed Palestinian Authority condemned Israel's attacks, while U.S. Ambassador to Israel Tom Nides said on Twitter that "Israel has a right to protect itself."