Eight Israelis died and 25 were injured in Thursday's assaults on a normally tranquil desert road. Israeli leaders accused Egypt's new rulers of losing their grip in the Sinai region, stoking tensions between the two neighbours.

At least seven of the attackers were killed as Israeli forces launched a massive manhunt along the frontier, north of the Red Sea resort of Eilat. An Egyptian official said three Egyptian security men had died in the crossfire.

Israel swiftly accused Gazan militants of orchestrating the audacious strike and the Israeli air force hit various targets in the Palestinian enclave in the following hours, killing the commander of the group blamed for the assault.

Television pictures on Friday showed eight bodies in a Gazan morgue. Medical officials said a 13-year-old boy was among the dead and that at least 17 people were wounded in the numerous strikes.

Gaza militants fired at least 10 rockets at southern Israel cities, one of which was shot down by an interceptor, the Israeli military said. Two rockets fired at the city of Ashdod caused damage and two injuries at a synagogue and school.

Israel said the attackers infiltrated from the Hamas-run Gaza Strip via Egypt's Sinai desert, despite stepped up efforts by Egyptian security forces in recent days to rein in Palestinian and Islamist radicals.

"We would hope that yesterday's terrorist attack on the border would serve as an impetus for the Egyptian side to more effectively exercise their sovereignty in Sinai," said a senior Israeli official, who declined to be named.

"The Israeli assessment is that Egypt is in no way interested in seeing extremist elements establish a platform in Sinai. In our assessment, that would hurt their interest as much as it hurts ours," he added.

VOWING REVENGE

Israel blamed the attacks on the Gaza-based Popular Resistance Committees (PRC), an armed faction that often operates independently of Hamas.

The PRC said its commander, Kamal al-Nairab, his deputy, Immad Hammad, and three other members were killed in Thursday's air strike on a home in the southern Gaza town of Rafah.

"The people who gave the order to murder our people and hid in Gaza are no longer among the living," Israeli Prime Minister Benjamin Netanyahu said in an address on state television.

"I set a principle: when someone harms the citizens of Israel, we react immediately and with force."

The faction vowed "double" revenge against Israel for the attack, which local Palestinians said also killed a nine-year-old son of the owner of the house. The group denied involvement in Thursday's attacks in Israel, but did claim responsibility for Friday's rocket fire.

A senior Israeli official said the gunmen, unable to cross into Israel through the heavily patrolled border with the Gaza Strip, had gone into the Sinai and then infiltrated from there into southern Israel.

The Sinai forms a huge desert buffer zone between Egypt and Israel, who sealed an historic peace treaty in 1979 after fighting two wars in less than a decade.

Israel enjoyed good relations with former Egyptian President Hosni Mubarak, but following his downfall in February, Israeli officials have regularly voiced concern about a security vacuum along their joint border.

In Washington, U.S. Secretary of State Hillary Clinton said in a statement the "brutal and cowardly attacks" near Eilat "appear to be premeditated acts of terrorism against innocent civilians".

Clinton said the violence "only underscores our strong concerns about the security situation in the Sinai Peninsula". She urged Egypt to find a lasting resolution.

On Tuesday, Egyptian security sources said an army crackdown on armed groups in the northern Sinai had netted four Islamist militants as they prepared to blow up a gas pipeline.

Israel has started to build a fence along its 180-km-long (110-mile) frontier with Egypt that the army hopes to complete by the end of 2012.