Fears of renewed conflict in Gaza after Israel warns of 'resumption of hostilities'

First major flare-up between Israel and Gaza since ceasefire on May 21

Tensions were high in Israel and Gaza on Wednesday after the Israeli air force launched air strikes on the Gaza Strip in the early hours of the morning.

The strikes were launched after militants in the Palestinian territory sent incendiary balloons into southern Israel, security sources and witnesses said.

The retaliation was the first major flare-up between Israel and Gaza since a ceasefire on May 21 ended 11 days of heavy fighting that killed 260 Palestinians and 13 people in Israel.

Palestinian sources say Israel's air force hit at least one site east of the southern Gaza city of Khan Younis.

On Wednesday afternoon, Hamas released images on its social media channels showing more incendiary balloons being sent into Israel, increasing the risk of further Israeli air strikes.

The Israeli authorities said that in response to the "arson balloons", on Tuesday, its "fighter jets struck military compounds belonging to the Hamas terror organisation".

It said "facilities and meeting sites for terror operatives" in Khan Younis were the targets.

About 1,000 apartments, offices and shops were destroyed in the latest round of fighting in May in Gaza, an impoverished enclave of two million inhabitants controlled by the Hamas group.

Wednesday's strikes were Israel's first against Gaza since a new coalition government took over on Sunday night, removing prime minister Benjamin Netanyahu after 12 years in power.

The incendiary balloons, which local firefighters said caused about 20 fires in southern Israel, were sent as more than 1,000 ultra-nationalist demonstrators bearing Israeli flags poured into Jerusalem's Old City on Tuesday.

Prior to Wednesday morning's air strikes, Hamas spokesman Fawzi Barhoum said that his group had scored another victory against Israel by forcing Israeli police to change the route of the flag march and placing the Israeli army on high alert, forcing an emergency deployment of the Iron Dome anti-rocket battery.

The Israeli military later released a statement saying they were preparing for any eventuality including, "a return to hostilities" in Gaza.

The US and UN had called for restraint before the march, which was authorised by the government of new Israeli Prime Minister Naftali Bennett.

A large police contingent blocked roads and fired stun grenades and foam-tipped bullets to remove Palestinians from the main route of the march.

Medics said 33 Palestinians were wounded and police said two officers were injured and 17 people arrested.

Hamas had threatened reprisals over the march, which celebrated the anniversary of Israel capturing East Jerusalem from Jordan in 1967.

It later annexed it in a move not recognised by most of the international community.