The woman, 57, died of wounds sustained when a rocket fell around 8:00 am (0500 GMT) in a street in the town of Sderot, five km north of Gaza, police and medics said.

A 24-year-old man was seriously wounded in the strike, one of six rockets to fall in Sderot in the morning hours, one of them not far from the house of Defence Minister Amir Peretz who lives in the town.

The man was a member of a private security firm that guards Peretz's home, police said.

In a statement, the defence minister vowed that the Jewish state would strike against those behind the rocket fire.

"These organisations will pay a heavy price," he said. "We will move against those who are involved in the firing of rockets, starting from their leaders and down to the last of their terrorists."

Wednesday's death marked the first time since July 2005 that Palestinian rocket fire killed someone inside the Jewish state, according to the army, and came a week after an Israeli artillery strike killed 19 Palestinians, mostly women and children, in Gaza's northern town of Beit Hanun.

In Gaza City, the armed wings of the Palestinian ruling Hamas movement and the ultra-radical Islamic Jihad group both said they had fired salvoes into Israel to avenge the Beit Hanun deaths, which sparked worldwide condemnation.

"This holy warrior operation comes... in response to the massacre of Beit Hanun and the continuing Zionist crimes against our Palestinian people," said a statement from Ezzedine al-Qassam Brigades, Hamas's armed wing.