TEL AVIV — Sirens sounded across Tel Aviv for a fourth straight day on Sunday, AFP correspondents said, as Israeli police confirmed two rockets had been intercepted over the city by the Iron Dome defence system.

"Two rockets were intercepted by the Iron Dome system," police spokesman Luba Samri told AFP shortly after the sirens sent residents running for cover across the commercial metropolis and in nearby Bnei Brak and Ramat HaSharon.

The Israeli army confirmed the interception, but said that only one rocket had been fired from Gaza.

The sirens sparked panic, bringing traffic to an abrupt halt as pedestrians and drivers ran to find shelter, an AFP correspondent said.

Immediately beforehand, another correspondent in Gaza City reported hearing the loud report of an outgoing rocket, with Hamas militants from the Ezzedine al-Qassam Brigades claiming they had fired an Iranian-built Fajr 5 rocket at Tel Aviv.

The group later said it had fired a second rocket at the city of Herzliya, just north of Tel Aviv, but there were no reports of an alert there.

Shortly after the interception, a car just south of Tel Aviv caught fire, apparently as a result of falling debris from the rocket, Samri said.

"A car caught fire in Holon, apparently as a result of shrapnel falling when the rocket was intercepted by Iron Dome," she told AFP.

In a separate development, two people were lightly wounded when a rocket scored a direct hit on a building in the southern coastal town of Ashkelon, the Magen David Adom emergency services said.

Since Thursday there have been five alerts in the greater Tel Aviv area, warning residents to seek shelter immediately because of an incoming rocket from Gaza in what Israeli networks said were the first such attacks on the city since the 1991 Gulf War.

Seven rockets have been fired towards Tel Aviv in that period, with three hitting the sea, three intercepted by Iron Dome and another slamming into open ground near the southern city of Rishon LeTzion on Thursday.

On Friday, air raid sirens also sounded in Jerusalem, sparking panic among residents shortly after the start of Shabbat, with police and the army confirming that a rocket had struck just outside the city, in the West Bank.

Sunday's incident comes as Israel presses a relentless air campaign in Gaza, with militants firing more than 700 rockets over the border.

The attacks targeting Israel's two biggest cities marked the farthest that rockets fired from Gaza have ever reached inside the Jewish state.

Tel Aviv-Jaffa lies some 60 kilometres (36 miles) north of the Gaza Strip, while Jerusalem is 65 kilometres (40 miles) away.

Iranian-made Fajr 5 rockets have a range of up to 75 kilometres (46 miles).

On Thursday, Hamas said it had developed its own longer-range rocket, the M75, which was used to target Jerusalem.