Five Palestinians have been killed in the first clash between Israeli troops and Hamas fighters since a truce was declared in June.

Three more people were injured in the incident late on Tuesday which involved a gun battle inside Gaza near the border, Palestinian rocket fire and an Israeli air strike.

Israeli troops and Hamas fighters fired at each other after the soldiers went about 300m inside Gaza, saying they had discovered "a tunnel aimed at abducting soldiers".

Spokesman for the Israeli army and Hamas confirmed the gun battle.

Dr Moaiya Hassanain, a Palestinian health ministry official, said one Palestinian - identified by residents of the area as a Hamas fighter - was killed and three were wounded, including a woman, in the fighting.

Shortly after, Hamas said it fired mortars at southern Israel and the army said it launched an air strike at the mortar launchers and hit them.

Hamas radio confirmed that four fighters were killed in the air strike.

Hamas vowed revenge, saying on its military wing's website that its "response will be harsh, and the enemy will pay a heavy price".

A senior Israeli military official speaking on condition of anonymity said the tunnel had been dug from inside a Gaza home, illustrating that Hamas was using civilians for cover.

Truce threatened

Both sides claimed they had not violated the Egyptian-mediated truce reached in June after months of indirect negotiations that halted a deadly cycle of Palestinian rocket attacks and Israeli bombardment.

The army said it was acting to remove an immediate threat to Israel while Hamas said it was trying to prevent an Israeli incursion.

Despite the truce, Israel has closed its crossings into the coastal strip of 1.4 million Palestinians and mostly kept the crippling siege it imposed on the area after Hamas forcibly took over the territory from Fatah forces loyal to Mahmoud Abbas, the Palestinian president, in June last year.

Sporadic rocket attacks on southern Israel from Gaza have also persisted in spite of the ceasefire.

Gilad Shalit, an Israeli soldier, was seized near the Gaza Strip by Palestinian fighters who tunnelled across the border in June 2006.

The fighters continue to demand the release of hundreds of Palestinian prisoners in return for Shalit.

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