At least 20 people are dead, including nine children, as the Palestine-Israel conflict escalated into rocket attacks and airstrikes on Tuesday morning.

Israel’s Prime Minister Benjamin Netanyahu is threatening even more retaliation after Hamas militants fired dozens of rockets at Israel.

The rockets, which were fired from the Gaza strip, set off air raid sirens near the border and as far away as Jerusalem.

Hamas, which controls the strip, said it was punishing Israel after clashes with police outside Jerusalem’s al Aqsa mosque left more than 300 Palestinians injured.

In response to the rocket attacks, Israel has already launched airstrikes on Gaza.

According to the health ministry in the Palestinian coastal territory, the strikes killed at least 20 people, including nine children.

Seven victims, three of whom were children, came from one family.

“We will not tolerate an attack on our territory, in our capital, on our citizens and soldiers. Whoever attacks us will pay a heavy price,” Mr Netanyahu said.

He warned the fighting could “continue for a while”.

How it escalated

Sirens went off in Jerusalem after rockets were fired from the Gaza strip. Photo: AAP

Hundreds of Palestinians had hurled rocks at police near the al Aqsa mosque.

The violence erupted on the anniversary of Israel’s capture of parts of Jerusalem in the 1967 Middle East war.

Police proceeded to fire tear gas, stun grenades and rubber bullets at the Palestinians.

Hamas then gave Israel an ultimatum to stand down its forces at al Aqsa and another Jerusalem flashpoint by 6pm.

Meanwhile, Israel’s military announced it was suspending for a day a major exercise, citing possible “escalation scenarios”.

But minutes after Hamas’ deadline passed, sirens blared in Jerusalem and several explosions were heard.

The Palestinian Red Crescent Society said at least 305 Palestinians were injured and 228 of them were taken to hospital in the skirmishes at al Aqsa, situated in a compound holy to Muslims, Jews and Christians.

It said several were in critical condition.

Police said 21 officers were injured.

Recent clashes in Jerusalem have raised international concern about wider conflict and the White House called on Israel to ensure calm during “Jerusalem Day”.

Hamas last fought a war with Israel in 2014.

-with AAP