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Palestinian militant factions have threatened to retaliate against Israeli bombardment of the Gaza Strip amid the worst military flare-up since the 2014 Gaza war.

Islamic Jihad and Hamas's military wing, the Ezzedine al-Qassam Brigades released the on Wednesday after Israeli officials denied being part of a ceasefire with the groups.

"The time has ended when the enemy can set the rules of the conflict unilaterally," the statement, which was signed by 12 Gaza-based groups, said.

"Bombing will be met with bombing… We are ready to respond with all our strength to any aggression or folly committed by the enemy," it added.

The exchange of fire on Tuesday and into the early hours of Wednesday began with a barrage of rocket and mortars into Israel from Gaza.

Israel said it targeted some 65 militant sites in the Gaza Strip. It also said around 100 rockets and mortars fired from Gaza either exploded in Israel or were intercepted by air defences.

Three Israeli soldiers were wounded, one moderately and two lightly, the military said. There were no reports of casualties in Gaza.

Late Tuesday, an Islamic Jihad spokesman said a ceasefire had been reached, and on Wednesday senior Hamas official Khalil al-Hayya also spoke of an accord.

Though Israeli officials denied being part of a ceasefire, calm was maintained on Wednesday.

Prime Minister Benjamin Netanyahu said Israel's military had delivered the "harshest blow" in years to Gaza militants.

Tuesday's incidents follow the Israeli massacres of Palestinian protesters along the Gaza border that started on March 30.

They peaked on May 14, when at least 61 Palestinians were killed as tens of thousands of Gazans protested on the same day of the US transfer of its embassy in Israel from Tel Aviv to Jerusalem.

At least 119 Palestinians have been killed by Israeli fire and more than 10,000 have been injured since mass demonstrations began on March 30.

No Israelis have been killed and only a few soldiers have suffered minor injuries.

The protests - dubbed "Great Return March" - have centred on the right of Palestinian refugees to return to their homes, after they were expelled following the 1948 creation of Israel.

Protesters have also demonstrated against the crippling decade-long Israeli blockade of the Gaza Strip.