The incident was the first armed confrontation between the sides since a truce took effect in June.

An Israeli airstrike later killed four more militants, Palestinian officials said.

The Israeli army said its forces uncovered a tunnel about 250 metres inside the central Gaza Strip that militants planned to use to abduct Israeli soldiers. It said a special army unit had headed to the area to destroy the tunnel.

The army claimed the move did not violate the truce, but instead was a legitimate step to remove an immediate threat to Israel from Gaza, which is controlled by the Islamic militant group Hamas.

But Dr Moaiya Hassanain, a Palestinian Health Ministry official, said heavy gunbattles erupted, killing one Palestinian and wounding three, including one woman. Residents identified the dead man as a Hamas militant.

Hamas also insisted it had not violated the truce and was acting to prevent an Israeli incursion. Shortly after, it said it fired mortars at southern Israel. The Israeli army said it launched an airstrike at the mortar launchers and identified hitting them. Hamas radio confirmed that four militants were killed in the strike.

The violence marked the most serious fighting in Gaza since the truce took effect. The only other fatality occurred in July, when Israeli troops shot and killed a teenage Palestinian militant along the border with the Gaza Strip.

Abu Obeida, a spokesman for Hamas' military wing, said Hamas troops were engaged in a gunfight with Israeli forces in central Gaza.

Hamas quickly vowed revenge for its casualty. "Our response will be harsh, and the enemy will play a heavy price," Hamas said in a statement on its military wing's Web site.