Palestinian militants say they fired 130 missiles at the Israeli city of Tel Aviv after an Israeli air strike felled a tower block in the Gaza Strip.
The 13-storey building was attacked an hour and a half after residents and local people were warned to evacuate, Reuters news agency reports.
Israel's military says it is targeting militants in Gaza in response to earlier rocket attacks.
At least 31 people have died in some of the worst violence in years.
The international community has urged both sides to end the escalation, which follows days of unrest in Jerusalem.
Militants had already fired hundreds of rockets towards Jerusalem and other areas.
Three people have been killed in Israeli areas while at least 28 Palestinians have been killed by Israeli air strikes.