Palestinian security and Israeli military sources said five air strikes had been carried out overnight across Gaza, less than two weeks after Israeli ground troops ended a 38-year-occupation of the territory.

Israel warned of harsh reprisals after Hamas fired a volley of rockets into its territory following a bomb blast during a Hamas rally which killed at least 15 people.

Most of the casualties in the Israeli air raids, half of them women and children, were injured during a strike against a school north of Gaza City which was run by the radical Hamas movement, Palestinian medics said.

Medical sources said eight women and three children were wounded as well as several elderly people. The school and several nearby houses sustained heavy damage.

The Israeli army confirmed it had hit a Hamas-run school which it said had been used “as a channel to pass on money to terrorists and their families”.

Other sites targeted included the offices of the leftist Popular Front for the Liberation of Palestine (PFLP) in the nearby town of Beit Lahiya, an army spokeswoman said.

The leftist organisation is currently observing a ceasefire and has not been blamed by Israel for any recent attacks but the army said its political offices were regarded as a legitimate target as it was a “terrorist organisation”.

The air force also hit a building in Khan Yunis and a second structure in the nearby town of Bani Suheila which the army said was used to manufacture weapons by the Al Aqsa Martyrs’ Brigades, a radical armed offshoot of Palestinian leader Mahmud Abbas’ ruling Fatah party.

The air raids came shortly after Israel warned that anyone involved in attacking Israeli targets was a “legitimate target” for military action.

“Anyone who tries to fire from the Gaza Strip into Israel will be a legitimate target for us,” a senior government official told AFP after a security cabinet meeting chaired by Israeli Prime Minister Ariel Sharon.

The unrest was sparked by an incident on Friday night at a Hamas rally in northern Gaza when at least 15 people were killed in a blast which is widely both Israel and the Palestinian Authority have said was caused by explosives packed into a Hamas jeep.

Hamas however has blamed Israel, subsequently firing dozens of rockets from Gaza into southern Israel which the Palestinian security forces appeared to do little to stop.

Despite the escalating violence, Israeli the security cabinet held back from agreeing to let the army mount a ground offensive into the territory it withdrew from a fortnight ago following a 38-year occupation.

“There is the option of a ground operation but we will wait to see what steps the Palestinian Authority takes,” the official said.

General Israel Ziv, head of the operations at army general staff said the campaign against the likes of Hamas “will not be subjected to any time limits.”

“We want to stop the firing of the rockets against Israel and we will use all methods at our disposal,” he told army radio.

Meanwhile in the West Bank, military sources said a total of 207 people had been arrested overnight.

Palestinian sources said that among those arrested in the dragnet operartion was Sheikh Hassan Yussuf, the leader of Hamas in the West Bank.

UN Secretary General Kofi Annan was among those who expressed alarm at the escalation in violence.

“The secretary general is alarmed by the escalation of violence between Israel and armed Palestinian factions in the past two days, which risks stymieing efforts to seize the momentum generated by Israel’s withdrawal of settlements from Gaza and the northern West Bank,” a statement said.