A Palestinian rocket narrowly missed a crowded kindergarten in southern Israel today, prompting warnings that the Jewish state will hit back hard if the constant stream if missiles from the Gaza Strip does not stop.

Islamic Jihad, one of the most extreme of Palestinian factions, said it fired the rocket that landed next to a day care centre in Sderot where 15 toddlers were playing. None was hurt, but terrified mothers rushed to the scene to rush their infants to shelter. In total, seven rockets slammed into the area.

Islamist militants in Gaza fire crude, unguided rockets at Sderot almost every day, although few cause serious damage or injury. However, Israeli officials have warned that a particularly bloody attack, such as a direct hit on a kindergarten, could trigger a full scale invasion of the Gaza Strip to stem the daily volleys.

“At some stage, decided by Israel, there will be no choice but to wage a campaign in the Gaza Strip,” said Tzahi Hanegbi, chairman of parliament's Defence and Foreign Affairs Committee.

“We will not limit ourselves in regards to targeting the rocket launchers and those who dispatch them,” threatened Ehud Olmert, the Israeli prime minister after the attack triggered panic in the working class town, where nerves have been strained for months because of the missile attacks. Sderot is less than a miles away from the Gaza Strip, which came under control of the anti-Israeli Islamist movement Hamas in fighting two months ago.

While Hamas pioneered the home-made Qassam rockets, its role has now been surpassed by the even more fanatical Islamic Jihad, which is behind most of the launches now. At least 12 people have been killed by the rockets in the past seven years.

Last week, Israeli shell fire killed three Palestinian children who had wandered too close to a rocket launcher that had been set up near an urban area. Israel has also launched bloody raids into Gaza to destroy rocket positions and carried out missile attacks on Islamic Jihad leaders.

The head of the Sderot Parents Association said parents were pulling all 2,500 of the town's students out of school, just a day after the autumn term started.

“Buses are already on the way to pick up students who haven't been taken home already,” Batya Katar said. “The school year is over. We can't hold on any more.”

But Mr Olmert’s office insisted there were enough schools with fortified roofs to avoid the need of moving schoolchildren to classes elsewhere in Israel, as Ms Katar had demanded.

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