The Israeli measures, along with restrictions by neighbouring Egypt, have tightly controlled the movement of people and goods in and out of the territory.

In a short statement, the Iranian-backed group said it had completed its "retaliation" for Israel's killing of three members. But it said it would respond to any further Israeli "aggression."

The U.S. was believed to be holding back on releasing the peace plan until Israel had a permanent government. Those calculations may have changed as the deadlock in Israeli politics looks to be further prolonged.

Fatah and Hamas remain bitter enemies, and repeated attempts to reconcile have failed.

The Israeli military said its air defence system, known as Iron Dome, intercepted the rocket. There were no reports of casualties.

Before the truce was announced, a pre-dawn Israeli airstrike killed eight members of the same family in Gaza.

More than 250 rockets have been fired at Israeli communities since the violence erupted following an Israeli airstrike that killed a senior Islamic Jihad commander.

In eastern Gaza, the Israeli strike killed Bahaa Abu el-Atta and his wife, setting off a furious barrage of dozens of rocket attacks reaching as far as the Tel Aviv heartland as Islamic Jihad vowed further revenge.

Management at the United Nations Relief and Works Agency, meanwhile, has denied the allegations.

The plan, which has been two years in the making, envisions large-scale investment and infrastructure work in the Palestinian territories. But the central political elements remain mostly unknown.