Israel has battered Gaza a day after suffering its bloodiest attack in decades when Hamas fighters rampaged through Israeli towns, killing hundreds and abducting an unknown number of others, threatening a major new war in the Middle East.

Israel reports more than 300 people have been killed, and more than 2000 people injured after Hamas militants launched a surprise attack on Israel in the deadliest day of violence in Israel for 50 years.

More than 300 people have been killed in Gaza with more than 2000 wounded, Palestinian officials say, the BBC reports.

In a sign the conflict could spread beyond Gaza, Israel and Lebanon’s Iran-backed Hezbollah militia exchanged artillery and rocket fire, while in Alexandria, two Israeli tourists were shot dead along with their Egyptian guide.

Overnight, Israeli air strikes had hit housing blocks, tunnels, a mosque and homes of Hamas officials in Gaza, as Prime Minister Benjamin Netanyahu vowed “mighty vengeance for this wicked day”.

In southern Israel, Hamas gunmen were still fighting Israeli security forces 24 hours after a surprise, multi-pronged assault during a rocket barrage smashed through security barriers and army bases to send hundreds of fighters into nearby towns.

Israel’s military, which faces questions over its failure to prevent the attack, said it had regained control of most infiltration points, killed hundreds of attackers and taken dozens more prisoner but was still fighting in some places.

It said it had deployed tens of thousands of soldiers in the area surrounding Gaza, a narrow strip that is home to 2.3 million Palestinians, and planned to evacuate all Israelis living around the frontier of the territory.

“We’re going to be attacking Hamas severely and this is going to be a long, long haul,” a military spokesman told a briefing with reporters.

Hamas fighters began their attack at dawn on Saturday with a huge barrage of rockets into southern Israel, giving cover to an unprecedented, multi-pronged infiltration of fighters into Israel from Gaza.

Surging violence

The escalation comes against a backdrop of surging violence between Israel and Palestinian militants in the Israeli-occupied West Bank, where a Palestinian Authority exercises limited self-rule, opposed by Hamas that wants Israel destroyed.

The West Bank has seen stepped-up Israeli raids, Palestinian street attacks and assaults by Jewish settlers on Palestinian villages. 

Conditions for Palestinians have worsened under Netanyahu’s hard-right government and peacemaking has been stalled for years.

Hamas leader Ismail Haniyeh said the assault that began in Gaza would spread to the West Bank and Jerusalem. 

Gazans have lived under an Israeli blockade for 16 years.

In a speech, Haniyeh highlighted threats to Jerusalem’s Al-Aqsa Mosque, the continuation of an Israeli blockade on Gaza and Israeli normalisation with countries in the region.

“How many times have we warned you that the Palestinian people have been living in refugee camps for 75 years, and you refuse to recognise the rights of our people?”

Carnage

Bodies of Israeli civilians were strewn across the streets of Sderot in southern Israel, near Gaza, surrounded by broken glass after the Hamas attack. The bodies of a woman and a man were sprawled across the front seats of a car.

Terrified Israelis, barricaded into safe rooms, recounted their plight by phone on live TV.

“They just came in again, please send help,” a woman identified as Dorin told Israel’s N12 News from Nir Oz, a kibbutz near Gaza.

“My husband is holding the door closed … They are firing rounds of bullets.”

Gaza pounded

In Gaza, black smoke and orange flames billowed into the evening sky from a high rise tower hit by an Israeli retaliatory strike.

Crowds of mourners carried the bodies of killed militants through the streets, wrapped in green Hamas flags.

Gaza’s dead and wounded were carried into crumbling and overcrowded hospitals with severe shortages of medical supplies and equipment.

Streets were deserted apart from ambulances racing to the scenes of air strikes.

Israel cut the power, plunging the city into darkness.

Rockets and hostages

Hamas said it fired a volley of 150 rockets towards Tel Aviv on Saturday evening in retaliation for an Israeli air strike that took down a high rise building with more than 100 apartments.

Hamas deputy chief Saleh al-Arouri told al-Jazeera that the group was holding a large number of Israeli captives, including senior officials.

He said Hamas had enough captives to make Israel free all Palestinians in its jails.

The Israeli military confirmed Israelis were being held in Gaza, although the precise number remained unknown.

Hamas said the attack was driven by what it said were Israel’s escalated attacks on Palestinians in the West Bank, Jerusalem and against Palestinians in Israeli prisons.

“This is the day of the greatest battle to end the last occupation on earth,” Hamas military commander Mohammad Deif said, announcing the start of the operation in a broadcast on Hamas media and calling on Palestinians everywhere to fight.

In Gaza, residents rushed to buy supplies in anticipation of days of war ahead. Some fled their homes and headed for shelters.

“We are afraid,” Palestinian woman, Amal Abu Daqqa, told Reuters as she left her home in Khan Younis.

Palestinians inspect the destroyed surrounding of the Palestine Tower after Israeli warplanes targeted it in Gaza City. Photo: AAP

World reaction

The biggest incursion into Israel in decades could undermine United States-backed efforts to forge regional security alignments that could threaten Palestinian aspirations for statehood and the ambitions of the group’s main backer, Iran.

US President Joe Biden condemned the attacks by Hamas and unequivocally said the United States stands by Israel.

“I made clear to Prime Minister Netanyahu that we stand ready to offer all appropriate means of support to the government and people of Israel,” Biden said.

United Nations Middle East peace envoy Tor Wennesland also condemned the attacks on Israel, warning in a statement: “This is a dangerous precipice, and I appeal to all to pull back from the brink.”

Australian Foreign Minister Penny Wong has condemned the militant attacks and says Australia recognises Israel’s right to defend itself.

Hamas rules the Gaza Strip and has been classified as a terrorist organisation by Australia since 2001.

“Australia unequivocally condemns the attacks on Israel by Hamas including indiscriminate rocket fire on cities & civilians,” Senator Wong wrote on social media platform X.

Wong pleads for peace

“We call for these attacks to stop and recognise Israel’s right to defend itself.”

Senator Wong added that “Australia urges the exercise of restraint & protection of civilian lives”.

Opposition Leader Peter Dutton said the Coalition “utterly condemns the unprovoked and abhorrent attack by militant Hamas on Israel”.

“It is yet another example of a deliberate act of violence intended to inflict maximum harm on innocent civilians,” he said.

“The attack is a provocation. Israel has every right to defend itself in response and to deter future attacks and other acts of aggression, coercion and interference.”

—TND with AAP and Reuters