GAZA, Gaza Strip -- An Israeli airstrike in Gaza killed three senior Hamas military commanders Thursday, delivering a likely blow to the organization's morale and highlighting the long reach of Israel's intelligence services.

The strike marked a further escalation in fighting after Egyptian efforts to end the war collapsed earlier this week, and signalled no end in sight for violence that has killed more than 2,000 Palestinians and 67 Israelis.

The pre-dawn strike levelled a four-story house in a densely populated neighbourhood of the southern town of Rafah, killing six people, including the three senior Hamas commanders.

Israel said the trio had played a key role in expanding Hamas' military capabilities in recent years, including digging attack tunnels leading to Israel, training fighters and smuggling weapons to Gaza.

Thousands of Palestinians marched through Rafah in a funeral procession Thursday afternoon firing guns, waving flags of different militant groups and chanting religious slogans. Those killed were carried aloft through the crowd on stretchers, wrapped in green Hamas flags.

Sami Abu Zuhri, a Hamas spokesman, said Israel "will not succeed in breaking the will of our people or weaken the resistance," and that Israel "will pay the price."

Israeli Prime Minister Benjamin Netanyahu praised the "superior intelligence" of the Shin Bet security service and the military's "precise execution" of the attack.

Israel approved 10,000 reservists to be called up for duty Thursday afternoon. But not all of them were mobilized immediately, a defence official said on condition of anonymity because he is not allowed to brief the media.

About two thousand reservists who were sent home about two weeks ago, when the violence appeared to have subsided, were called back for service on Wednesday.

The killing of the three Hamas commanders will likely buy Netanyahu some time as the Israeli public becomes increasingly impatient with the government's inability to halt rocket fire from Gaza.

Gaza police and witnesses said several missiles hit the four-story building. Israel and Hamas identified the three commanders killed in the 3 a.m. airstrike as Mohammed Abu Shamaleh, Raed Attar and Mohammed Barhoum.

In pinpointing the whereabouts of the Hamas commanders, Israel likely relied to some extent on local informers. Israel has maintained a network of informers despite its withdrawal from Gaza in 2005, in some cases using blackmail or the lure of exit permits to win co-operation.

Al Majd, a website linked to the Hamas security services, said Thursday that seven suspected informers were arrested in recent days and that three were killed "after the completion of the revolutionary procedures against them."

It was the second time during the Gaza war that the website announced suspected informers had been killed by Hamas.

The Rafah attack came a day after an apparent Israeli attempt to kill the top Hamas military leader, Mohammed Deif, in an airstrike on a house in Gaza City. Deif's wife and an infant son were killed in that strike, but the Hamas military wing said Deif was not in the targeted home at the time.

The body of his daughter, five-year-old Sara Deif, was recovered from underneath the rubble on Thursday, the Gaza Health Ministry said.

The back-to-back targeting of top Hamas military leaders came after indirect Israel-Hamas negotiations in Cairo on a sustainable truce broke down Tuesday. Gaza militants resumed rocket fire on Israel, even before the formal end of a six-day truce.

Since then, Gaza militants have fired dozens more rockets, and Israeli aircraft have struck dozens of targets in Gaza, dimming prospects for a resumption of the talks.

For now, the sides are sticking to unbridgeable demands. Hamas is demanding an end to an Israeli-Egypt blockade of Gaza. Israel, unwilling to grant Hamas any major concession it could claim as a victory in the six-week war, is demanding that Hamas disarm.

Despite the crisis, Palestinian President Mahmoud Abbas was holding talks in Qatar on Thursday with Hamas' top political leader in exile, Khaled Mashaal, and the emir of Qatar.

Hamas has rejected the Egyptian proposal, saying it contained no commitments by Israel to ease the border blockade of Gaza, which was imposed after the Hamas takeover of Gaza in 2007.

Israel says the blockade is needed to prevent Hamas and other militant groups from getting weapons. The restrictions prevent most Gazans from travelling outside the crowded coastal strip and bar most exports.

Since the Gaza war erupted six weeks ago, more than 2,000 Palestinians have been killed and about 100,000 left homeless, according to the U.N. and Palestinian officials. Israel has lost 67 people, all but three of them soldiers.

It was unclear if the killing of the three Hamas commanders would affect its ability to fire rockets. Israel estimated that Hamas had 10,000 rockets before the war and has lost about two-thirds of its arsenal since then.

Israel's military and Shin Bet internal security service emphasized the importance of the three Hamas commanders.

Abu Shamaleh had been the top Hamas commander in southern Gaza, while Attar was in charge of weapons smuggling and the construction of attack tunnels, and had played a role in the capture of Israeli soldier Gilad Schalit in 2006. Barhoum was a senior Hamas operative in Rafah, a joint statement said.

Abu Shamaleh was a comrade of Deif's who was involved in planning and carrying out at least four major attacks on Israeli soldiers since the 1990s, including one in 2004 that killed four and wounded 10, the statement said.

Attar, it said, was responsible for orchestrating a series of complex attacks on Israeli targets, including through the Sinai Peninsula in neighbouring Egypt.

In addition to the Hamas operatives, three others were killed in the Rafah strike, including a resident of the house and two neighbours, according to Palestinian health official Ashraf al-Kidra.

At least 20 people, including four children, were killed in 31 airstrikes across Gaza, according to al-Kidra. Israel also targeted smuggling tunnels along the Gaza border with Egypt.

The military said 55 rockets and mortars were fired from Gaza since midnight Wednesday, compared to more than 210 over the previous 30 hours.

An Israeli was seriously wounded when a mortar hit south of the southern city of Ashkelon on Thursday, it said.

In a nationally televised address Wednesday, Netanyahu showed little willingness to return to the negotiating table after six weeks of war with Hamas.

"We are determined to continue the campaign with all means and as is needed," he said.