The punitive measure follows more than a week of violent confrontations at the Al Aqsa Mosque compound in Jerusalem where more than 200 Palestinians were injured by rubber bullets, tear gas and stun grenades fired by Israeli security forces.
"Following the rockets fired toward Israeli territory from the Gaza Strip last night, it was decided that crossings into Israel for Gazan merchants and workers through the Erez Crossing will not be permitted this upcoming Sunday," Cogat, a unit of Israel's defence ministry responsible for Palestinian civil affairs, said.
The crossing had been closed since Thursday evening for the Jewish observance of Passover.
Cogat said the reopening of the Erez crossing would depend on "a security situational assessment".
Israel recently raised the number of Gazans allowed to cross into Israel for work to 12,000. Jobs in Israel offer a vital source of income for residents of Gaza, where the economy has stagnated under an Israeli blockade imposed after the Islamist Palestinian movement Hamas took control of the territory in 2007.
The Gaza workers union said the closure was “collective punishment” and would hurt the already suffering economy, where unemployment hovers around 50 per cent. It said the timing of the closure, just before the Eid Al Fitr holiday marking the end of Ramadan, would compound the pain for families struggling to make ends meet.
Sami Amassi, head of the union, said the permits were meant to “exploit” the workers for political purposes, rather than improve their lives.
Hamas spokesman Hazem Wassem said the move “aims at tightening the siege and is a form of aggression that we cannot accept”.
“This will not succeed. The police of collective punishment against the Palestinians has always proven to fail,” he told Associated Press.
Three rockets were launched at Israel from Gaza on Friday night and early on Saturday. No casualties were reported and the attacks did not trigger Israeli air raid sirens. One rocket fell short and landed near a residential building in northern Gaza, Palestinian and Israeli sources said.
Israel carried out retaliatory strikes on Gaza after earlier rocket attacks on Wednesday and Thursday.
Hamas nor other militant groups in Gaza have claimed responsibility for the rocket launches, which are seen as retaliation for recent incursions into Al Aqsa Mosque and its compound by Israeli forces.
The Al Aqsa Mosque compound is the third holiest site in Islam and is also revered by Jews, who are allowed to enter the compound but not pray there.
Israeli-Palestinian confrontations at the site last year helped to trigger an 11-day war between Israel and Gaza militants that claimed at least 256 lives, including 13 in Israel.