Israeli warplanes struck Gaza, killing the wife and child of Hamas's top military chief, the Islamist movement said Wednesday after truce talks in Cairo collapsed in a storm of violence.

It was not immediately clear whether Mohammed Deif himself, who has topped Israel's most wanted list for decades, was killed or wounded in the strike which hit a house in Gaza City late on Tuesday.

Hamas vowed bloody revenge, saying Israel had "opened the gates of hell".

The deadly attack came just hours after a resumption of the fighting in and around Gaza after more than a week of calm as Egyptian negotiators pushed the warring sides to broker a decisive end to six weeks of bloodshed.

The strike killed two and injured another 45, medics said, with Hamas confirming early Wednesday that those who died were the wife and child of Deif, who heads its armed wing, the Ezzedine al-Qassam Brigades.

Emergency services spokesman Ashraf al-Qudra initially said three people were killed in the strike, among them an unidentified man, but later revised the toll down to two. He did not explain why.

He named the victims as Widad Deif and her 7-month-old son, Ali.

Hamas called on people to attend their funeral which would take place at noon (0900 GMT) at a mosque in the northern town of Jabaliya.

Millions in Gaza and southern Israel spent another sleepless night as terror returned to the skies, with air strikes and rocket fire ending an extended lull brought on by back-to-back truce agreements.

Since the violence resumed on Tuesday afternoon, shattering more than a week of calm, at least 12 people have been killed in scores of Israeli strikes across Gaza, Qudra said.

A second deadly strike early on Wednesday killed seven people in the central town of Deir al-Balah, among them a heavily-pregnant woman and three children, he added.

In the same period, Gaza militants fired at least 80 rockets over the border, of which between 40 and 45 had hit southern and central Israel while another 24 were shot down, an army spokeswoman told AFP.

The army had hit 78 targets across Gaza, she added.

The violence erupted as Egyptian mediators pushed both sides to agree on a lasting end to the conflict ahead of a midnight (2100 GMT) deadline.

So far, the bloodshed in Gaza which erupted on July 8 has claimed the lives of 2,029 Palestinians and 67 on the Israeli side. The UN says around three quarters of the victims in Gaza were civilians.

Rockets torpedo truce

Tuesday's violence left Egyptian truce efforts in tatters, with Israeli Prime Minister Benjamin Netanyahu immediately ordering the delegation back from Cairo. Israel has repeatedly said it would never negotiate under fire.

"The rocket fire which broke the ceasefire also destroyed the foundation on which the talks in Cairo were based," Netanyahu's spokesman Mark Regev told AFP Wednesday.

"The Egyptian initiative is based on a total and unconditional cessation of hostilities, which was clearly broken when rockets were fired into Israel."

Most of the Palestinian negotiators, including delegation head Azzam al-Ahmed also left Cairo.

"We are leaving ... but we have not pulled out of negotiations," he told AFP, saying the Palestinians had handed a truce proposal to Israel and were waiting for the answer.

"We will not come back (to Cairo) until Israel responds."

Egypt expressed "profound regret at the breach of the ceasefire in Gaza" and said it was working to bring both sides back to the negotiating table, a foreign ministry statement said.

- Six-storey building flattened -

In northern Gaza City, a handful of neighbours were examining the destruction left from the evening air strike which killed Deif's wife and child.

Witnesses said at least three rockets were fired at the six-storey building, home to the Dalu family, pulverising it into a pile of dust, debris and twisted metal and leaving a huge crater in the ground where the building once stood.

A nearby bus was also destroyed, reducing to a ghostly metal frame, an AFP correspondent said.

Later in the morning, rescue workers could be seen pulling at least one body out of the rubble of the house which is located in the Sheikh Radwan district, but it was not possible to determine the victim's identity, the correspondent said.

The Ezzedine al-Qassam Brigades vowed it would avenge their deaths, saying Israel had "opened the gates of hell on itself" by the killings and would "pay the price for its crimes."

Following the attack, the Brigades said it fired 50 rockets over the border targeting Jerusalem, Tel Aviv and Ben Gurion airport, with sirens wailing across the south and centre and sending millions fleeing for shelter.

The army confirmed a rocket hit an open area metropolitan Tel Aviv and another struck empty ground in the occupied West Bank just outside Jerusalem.