Israel's air force fired about 30 missiles at targets in the Gaza Strip on Saturday, destroying several Hamas police compounds and killing more than 120 people, Al Jazeera television and witnesses said.
The Israeli military confirmed they had conducted strikes, saying they targeted 'terrorist infrastructure'.
Television footage showed dead bodies scattered on a road and wounded and dead being carried away by distraught rescuers. There was widespread damage to buildings.
More than 120 people were killed and 200 were wounded in the attacks, Al Jazeera said, citing the head of the Gaza ambulance service.
Hamas police spokesman Islam Shahwan said a police compound in Gaza City had been hosting a graduation ceremony for new personnel when it was attacked. Police chief Tawfiq Jabber was among the dead, the radio said.
"I'm afraid we have at least 40 dead," Shahwan said.
Uniformed bodies lay in a pile and the wounded writhed in pain, television pictures showed. Rescuers carried those showing signs of life to cars and ambulances, while others tried to revive the unconscious.
Several rescuers beat their heads and shouted: "Allahu akbar (God is greatest)." One badly wounded prostrate man was quietly reciting verses from the Koran.
Elsewhere in Gaza, at least two people were killed and 30 wounded from an attack in Khan Younis, a refugee camp in the south. At one site, there was a huge crater in the ground. Nearby medics carried people into an ambulance.
Witnesses said the attacks were carried out by warplanes and combat helicopters.
A Reuters correspondent said Gaza City port and security installations of the Islamist Hamas group were badly damaged. Thick black smoke billowed over the city.
The Israeli military had no immediate comment on the attack, which followed a decision by Prime Minister Ehud Olmert's security cabinet to widen reprisals for cross-border Palestinian rocket attacks on Israel.
A six-month truce expired last week in Gaza.
Since then, at least six militants have been killed by Israeli air strikes and dozens of rockets and mortar shells from Gaza have slammed into Israel, damaging homes and causing panic.
Olmert warned Islamist group Hamas on Thursday to stop firing rockets or pay a heavy price. "I will not hesitate to use Israel's might to strike Hamas and (Islamic) Jihad," he told Al Arabiya television, an Arab broadcaster widely watched in Gaza.
About a dozen rockets and mortar bombs were fired from Gaza on Friday. One accidentally struck a northern Gaza house killing two Palestinian sisters, aged five and 13, and wounding a third, Palestinian medics said.
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