"A bomb exploded on a bus in central Tel Aviv. This was a terrorist attack," Prime Minister Benjamin Netanyahu's spokesman Ofir Gendelman said on his official Twitter account.
Medics said 17 people were wounded in the blast that police said took place on a street which runs just behind the Kiriya, Israel's sprawling defence ministry.
Israeli bombs and artillery turned buildings, tunnels and bridges in Gaza into rubble overnight in 100 strikes confirmed by Israeli authorities, while Hamas media boasted about their militants' rockets hissing off in the direction of populated areas of southern Israel.
Five more Palestinians were killed in the Israeli air strikes.
The conflict has till now claimed 145 Palestinian lives and killed five Israelis.
US Secretary of State Hillary Clinton, who was dispatched to the West Asian region by President Barack Obama to defuse the crisis in Gaza, shuttled from meetings with Palestinian to Israeli leadership today, after hopes of an imminent agreement between Hamas and Israeli leaders that could have halted the explosive carnage at least for a while dissolved yesterday.
Clinton met with Palestinian Authority President Mahmoud Abbas in Ramallah in the West Bank, according to the US Embassy, and will sit down with Prime Minister Netanyahu in Jerusalem for a second day.
"President Abbas told Clinton that Egypt was the key to everything," Palestinian negotiator Saeb Erakat said of the meeting.
"President Abbas wished that before Clinton leaves Egypt a ceasefire will be announced," Erakat said.
UN Secretary General Ban Ki-moon also met with Abbas in Ramallah this morning. "Today the situation in Gaza is deeply alarming," he said, standing next to Abbas at a press conference. MORE
