"The quiet will finish at the end of this year... The quiet is meaningless because Israel continues to kill," spokesman Mushir al-Masri told AFP at the funerals in the impoverished Jabaliya refugee camp in the Gaza Strip.

Asked what he meant, the spokesman said that militant groups who signed up to the informal truce in Cairo last March agreed at the time to review the situation at the end of the year.

"This is what was agreed on at Cairo. We agreed if the quiet is successful, we would discuss whether it will continue... No one should dream there will be another quiet."

On Tuesday, Hamas, the most powerful Islamist movement in Gaza, warned Israel had "started a war" by killing local Qassam Brigades leader Fayez Abu al-Qaraa and a senior Al-Aqsa Martyrs Brigades commander, Hassan al-Madhun.

Just hours after Tuesday's deadly air strike, an Israeli soldier was shot dead by Palestinian gunmen in a West Bank operation to arrest a Hamas suspect.

The armed wing of Hamas, the Ezzedine al-Qassam Brigades, said it killed the 20-year-old conscript in a statement to AFP.

Around 15,000 people and hundreds of Hamas and Fatah gunmen turned out for the funerals as shouts of "Qassam, Qassam, revenge, revenge," filled the air and volleys of bullets were shot skywards.

Qaraa is the first Hamas member to have been killed in the latest flare-up of violence in which the Islamist faction has stayed largely silent since a Palestinian suicide bombing last week.

The Al-Aqsa Martyrs Brigades, a nebulous collection of cells linked to Palestinian leader Mahmud Abbas's ruling Fatah faction, renounced the informal and tenuous truce, largely in place since the beginning of the year.

"To hell with the truce," it said, announcing a "mobilisation" of its supporters in the wake of Madhun's death.

Militants in Gaza overnight fired a makeshift Qassam rocket at the Israeli community of Netiv Haasara, just north of the Palestinian territory. A mortar shell also fell north of the kibbutz of Nahal Oz.

Raanan Gissin, a spokesman for Prime Minister Ariel Sharon, told the Haaretz newspaper that Israel would only stop serving out "justice" to militants when the Palestinian Authority moves to take action against armed groups.