Israeli fire hit a house in the Gaza Strip today while a family was eating breakfast, killing six Palestinians, including four children and their mother, residents and medical officials said.

The deaths in the northern Gaza town of Beit Hanoun cast another shadow on Egyptian efforts to forge a ceasefire between Israel and militant groups and end violence threatening US-brokered Palestinian statehood talks.

"This aggression does not serve efforts being exerted to achieve calm, and it obstructs the peace process," Palestinian President Mahmoud Abbas, referring to Israel's military activities, said in a statement carried by WAFA news agency.

Israeli Defence Minister Ehud Barak, without giving details of the raid in Beit Hanoun, said Hamas Islamists controlling the Gaza Strip bore overall responsibility for casualties among non-combatants because gunmen "operated among civilians".

Medical officials and residents of Beit Hanoun, an area where militants frequently fire rockets at Israel, said an Israeli projectile smashed through the ceiling of a one-storey house where a family was having breakfast.

They said four children - siblings whose ages ranged from 1.5 to 5 years old - and their mother were killed in the house during what the Israeli military described as an operation against rocket launching crews and snipers.

"They were eating and they were hit," a neighbour said at the site.

A 17-year-old Palestinian civilian who was passing by the home was also killed in the explosion, medical workers said.

"We are currently investigating this morning's tragic incident," said Mark Regev, a spokesman for Israeli Prime Minister Ehud Olmert.

"Hamas operates from civilian areas and in combat situations between the Israel Defence Forces and Hamas terrorists, we make every possible effort to prevent civilians from being caught in the crossfire," Regev said.

Separately, Israeli soldiers killed a Palestinian gunman from Islamic Jihad during fighting in the town, the faction said.