The Israel Air Force killed two Palestinians and wounded three more in an attack on the northern Gaza Strip on Sunday, according to Palestinian media reports.

The five Palestinians were clustered just east of the Jabalya refugee camp at the time of the attack, said the reports. The Islamic Jihad militant group claimed the casualties as its members.

A spokeswoman for the Israel Defense Forces confirmed that an Israeli aircraft fired a missile at a group of militants in the enclave but gave no further details. According to Israel Radio and witnesses, they had been trying to launch a projectile at Israel.

In public remarks to his cabinet on Sunday, Prime Minister Benjamin Netanyahu said Israel has "no desire to escalate the situation", noting the frontier had been relatively quiet since the end of the December 2008-January 2009 Gaza war.

But he said: "We will not hesitate to use the might of the Israel Defense Forces against those who attack our citizens."

The strike came a day after Gaza groups signaled that they would halt rocket fire at Israel if the IDF stopped carrying out targeted attacks as well. The surge in cross-border violence over the last week has prompted fears of a possible escalation into war.

Hamas spokesman Ismail Rudwan said Saturday that militant leaders were "committed as long as the occupation [Israel] was committed" to abide by an earlier de facto truce. His comments followed a round of talks in Gaza, after of a weeklong swell in attacks.

Fire along the Gaza border already dropped precipitously over the weekend, but the Israel Defense Forces fears the lull won't last for long. GOC Southern Command Maj. Gen. Tal Russo Saturday described the situation in the Gaza Strip as "anarchic," as the IDF prepares to deploy the first of the two available Iron Dome missile defense systems in the south on Monday morning.

The army has described the step as an "operational experiment," saying the deployment of the Iron Dome and beginning its actual use will take some time. The Israel Air Force stressed that even the first two batteries will not be enough, and that at least three more will be needed to provide ample defense from Gaza rocket attacks.

Three rockets were fired from the Strip into Israel in the past two days, with one damaging a house in the Eshkol Regional Council and another landing in an open field. Another struck on Saturday afternoon. No casualties were reported in any of the incidents.

Visiting the community where the first missile struck, Russo said: "There's anarchy on the other side right now. It will be difficult for Hamas to roll things back. I hope they'll come to their senses."

He added that the anarchy in Gaza has spread both within Hamas and the smaller armed factions, referring to internal disagreements within Hamas on the question of renewing rocket fire on Israel or forcing other organizations to uphold the cease-fire.

Ismail Haniyeh, the head of the Hamas political wing in Gaza and the Palestinian prime minister, is pushing for a return to the relative quiet in the south, but senior officials in the Islamist organization, including some in the armed wing, disagree.

It seems Hamas is also finding it difficult to enforce its authority upon smaller factions, with small groups now carrying out their own policies. The fact many more Grad rockets were smuggled into the Strip in recent weeks and distributed between the factions also makes the situation more difficult to control.

The deterrence achieved after Operation Cast Lead two years ago was eroding, Russo said Saturday. Both the government and the IDF believe it will be difficult to retain any calm for long and that another escalation may occur in the near future.