Dozens of people were reported wounded as Israeli helicopter gunships pounded Palestinian security force targets in the Gaza Strip tonight.
The attack came just hours after a 10-month-old Israeli baby boy was seriously wounded in a Palestinian mortar bomb seriously on a Jewish settlement.
"The Palestinian Authority is not taking action to thwart attacks and leaves Israel with no choice but to act consistently and decisively to thwart terrorist attacks", Prime Minister Ariel Sharon's office said in a statement as missiles streaked across the night sky in Gaza City and the town of Rafah.
Witnesses said about 20 missiles were fired, hitting a Palestinian naval police base close to Yasser Arafat's presidential headquarters and an installation of the Force-17 security group.
At least five people were treated for wounds at Gaza City's Shifa hospital. Witnesses said Mr Arafat's office and residence were undamaged in the 45-minute air raid but a building at the naval police base was destroyed.
In a separate attack, Israeli assault helicopters fired about 30 missiles at a compound in Rafah, in the southern Gaza Strip, used by Palestinian police, intelligence and Force-17, witnesses said.
Hospitals in Rafah said at least 43 people were wounded. Women and children ran into the street, crying in panic as ambulance sirens wailed.
Defence Minister Binyamin Ben-Eliezer ordered the Israeli military to attack targets in the Gaza Strip where the attack that seriously wounded an Israeli baby was planned and launched, the minister's spokesman said.
"This is state terrorism and part of the military escalation by Israel against the Palestinian people", Palestinian peace negotiator Mr Saeb Erekat told Reuters.
Earlier, a 10-month-old Israeli baby was critically wounded and his mother slightly hurt when three mortar bombs hit the Jewish settlement of Atzmona, near Rafah.
Gunfire echoed into the night in the West Bank, where Israeli tanks fired at a Force-17 position near the Palestinian city of Ramallah. The army said soldiers in the area had shot back after coming under fire from Palestinian gunmen.