A rocket fired from the Gaza Strip on Thursday landed in the water just south of Tel Aviv, an AFP correspondent at the scene said, sparking panic across Israel's commercial capital.

It was the farthest that a rocket from Gaza had ever hit inside Israel, and came as the air force pressed a major bombing campaign across the Hamas-run territory.

"A rocket crashed into the water just outside of Jaffa," the correspondent said, as police confirmed that warning sirens had gone off across Tel Aviv.

"I was standing outside the French ambassador's residence when I saw the rocket falling into the sea," he said.

"There was about a minute between the sirens going off, warning residents to enter the shelters and the rocket landing. People in the street started running in all directions because they didn't know where to shelter," he said.

Israeli news networks said it was the first time rockets had been fired at the city since the 1991 Gulf War, when it was hit by Iraqi Scud missiles.

The rocket fire was claimed by the armed wing of the radical Islamic Jihad movement.

In a televised address shortly afterwards, military spokesman Brigadier General Yoav Mordechai said that no rocket had "hit the ground."

"Despite the sirens, nothing hit the ground. The direction (of the rocket) was apparently towards the southern part of Gush Dan," he said, referring to the region in and around greater Tel Aviv.

Police spokesman Micky Rosenfeld confirmed to AFP that "a rocket landed in the sea, near the southern Gush Dan area," without elaborating.

Footage on Israel's Channel 2 television showed people lying on the ground outside the defence ministry in central Tel Aviv, their hands over their heads as the sirens wailed.

Another AFP correspondent in the north of the city also reported hearing a loud explosion but there was no evidence that anything had hit the area.

Shortly after the sirens sounded and the rocket landed in the sea, mobile phone networks across the city appeared to go down briefly, AFP correspondents said.

After the attack, Islamic Jihad's Al-Quds Brigade announced that it had fired an Iranian-made Fajr 5 rocket at the sprawling coastal city in central Israel.

"The Quds Brigades hit the occupied city of Tel Rabea (Tel Aviv) with a Fajr 5 rocket causing a large explosion to shake the city," a statement from the group said.

Tel Aviv-Jaffa lies some 60 kilometres (36 miles) north of the Gaza Strip. Fajr 5 rockets have a range of up to 75 kilometres (46 miles).

The incident came as Israel pressed a major air offensive against Gaza militants, running more than 150 air sorties across the territory, killing 15 people and injuring more than 150.

In response, militants have fired more than 200 rockets at Israel, killing three and injuring 19 people, three of them soldiers, police and medics said.

Earlier on Thursday, the army said another rocket landed in the Rishon LeTzion area some 15 kilometres (nine miles) south of Tel Aviv without causing injuries or damage.

Rishon LeTzion is Israel's fourth largest city with a population of some 228,000 and is about 50 kilometres (30 miles) north of the Gaza Strip.

Earlier on Thursday, Israeli Prime Minister Benjamin Netanyahu said the air force had "caused significant damage to the Fajr rockets aimed at Tel Aviv, the (surrounding) Dan region and north of that."

He also pledged to take "whatever action is necessary" to defend Israelis from Palestinian rocket attacks, in a statement to the media.