GAZA CITY, Gaza Strip (AP) – Gaza militants fired Grad rockets at an Israeli city, forcing Israel to install a warning system, and Israel killed 20 Palestinians in a day of fighting that evoked a top-level warning of an Israeli invasion if the salvos continue.

The dead in Gaza Thursday included members of rocket squads, as well as five children, ranging in age from 8 to 12, who their relatives said were playing soccer when they were killed in a missile strike.

Israel has been reluctant to invade Gaza because of concerns of getting bogged down there, but Defense Minister Ehud Barak told his security chiefs Thursday that an offensive is a definite option. “The major ground operation is real and tangible. We are not afraid of it,” Barak said, according to a participant in the closed meeting.

Barak also told U.S. Secretary of State Condoleezza Rice and the British foreign minister in phone conversations that Israel would step up its response to the rocket fire, but a ground offensive wasn’t imminent.

The latest spike began Wednesday, when five Iranian-trained Hamas militants, including two rocket masterminds, were killed in an Israeli airstrike in southern Gaza. In retaliation, Hamas fired dozens of Gaza-produced Qassam rockets, as well as longer-range Iranian-made Grad rockets smuggled in via Egypt. Several Grad rockets slammed into Ashkelon, 17 kilometers (11 miles) north of Gaza, on Thursday. One hit an apartment building, slicing through the roof and three floors below, and another landed near a school, wounding a 17-year-old girl.

While more than two dozen rockets have hit the Ashkelon area in the past, most fell in open areas in the southern outskirts and did not cause damage. Ashkelon is a city of 110,000 on the Mediterranean coast.

The latest round of rocket fire was the most intense so far, and police chief Uri Bar-Lev said Thursday it was the first time a building in Ashkelon was hit. On Wednesday, a rocket exploded in the parking lot of Ashkelon’s Barzilai Hospital.

Up to now, the Israeli border town of Sderot, with about 20,000 residents, has been Hamas’ main target. In recent years, hundreds of Qassams have hit Sderot, just a mile from Gaza, and on Wednesday an Israeli father of four was killed by a rocket that hit a Sderot community college.

Ashkelon residents demanded better protection. “We want a warning system, like they have in Sderot,” one resident, Moshe Nissim, told Israel TV’s Channel Two. “We have no protection from Palestinian attacks.” The deputy director of Barzilai Hospital asked for fortifications for his emergency room, maternity ward and surgery departments.

Barak pledged Thursday to install the warning system in Ashkelon within hours, defense officials said.

A senior Israeli security official told The Associated Press the rockets fired into Ashkelon were Iranian-made imports, with a range of about 22 kilometers (14 miles). Some locally made rockets have fallen into the southern outskirts of the city.

The Grads are taken apart, smuggled into Gaza through tunnels and reassembled, and Hamas has only a limited supply, the official said on condition of anonymity, in line with briefing regulations. However, Hamas is rapidly upgrading its Qassams, which it can mass-produce in Gaza. Hamas has hundreds of Qassams in stock, and by the end of the year, it will likely have extended the Qassam range to 12 miles, the security official said.

Hamas officials struck a defiant tone Thursday. “We will never have equipment comparable to our enemy, but we are working all the time to have enough to make any aggression a regrettable adventure for the enemy,” said Abu Obeida, a spokesman for the Hamas military wing, Izzedine al-Qassam.

In Tokyo, visiting Israeli Prime Minister Ehud Olmert said Israel will go after the militants. “We will reach out for the terrorists and we will attack and we will try to stop them,” he said.

Rice, who briefly met with Olmert in Tokyo, said Hamas rocket attacks “need to stop,” but also expressed concern for the humanitarian situation in Gaza and urged calm on all sides.