A rocket fired from Gaza has landed in a residential area of Ashkelon, causing damage to cars and buildings.
Around eight people have been treated for shock and minor injuries after the missile landed in the southern Israeli city at around 8.30am local time.
Prior to the explosion the city’s rocket attack alarm was sounded.
The strike smashed windows in local buildings and damaged cars.
Ashkelon mayor Benny Vaknin told Israel Radio that the incident was “no doubt the most serious that has happened since Operation Cast Lead”.
Prime Minister Benjamin Netanyahu's office said the strike was seen as a “very serious” incident. There have been no immediate retaliatory strikes.
Ashkelon is around 10 miles north of the Gaza Strip and has 125,000 residents.
The president of the Board of Deputies, Vivian Wineman, said: "Today's provocative act of terror should be a wake up call to world leaders and to our own government.
“Hamas has not renounced its violent agenda and continues to launch such unprovoked attacks on innocent Israeli civilians.
“As such it is an obstacle to peace and a threat to the interests of both Israelis and Palestinians."