By Nathan Morley

In Jerusalem, just before an emergency meeting of top security officials, Prime Minister Benjamin Netanyahu said Israel was at war.

This situation came out of the blue on Saturday morning - by lunchtime, Israel's military was calling up thousands of reservists.

Listen to Nathan Morley's report

Rockets launched into Israel

Mohammed Deif, the leader of the Islamist militant group, said that thousands of rockets had been fired into Israel early on Saturday to launch what he called 'Operation Al-Aqsa Storm'.

Soon after, reports suggested gunmen on the loose in the town of Sderot opened fire on civilians, with some witnesses saying militants crossed the border and engaged in face-to-face fighting with the Israeli Army.

At the same time, the endless barrage of rockets continued to fly from Gaza into Israel, injuring scores of people in Ashkelon and Beer Sheva. Hamas claimed that over 5,000 were fired.

Fighting along the border

Near Gaza , reports emerged of Palestinians capturing Israeli military vehicles, including a tank. Fighting was also reported at the Erez border crossing as well as at the Zikim base - a training base belonging to the Israel Defence Forces.

It is also reported - but not confirmed - that 40 people have been killed, 700 wounded and at least 35 Israeli soldiers and civilians have been kidnapped and taken into Gaza.

Israel launches retaliatory strikes

As events unfolded, the Israeli military began carrying out retaliatory air strikes in the Gaza strip and warned that Hamas would 'pay a very heavy price'.

Israeli government officials are reported to have launched a major investigation as to how Israeli intelligence failed to see this well-coordinated Hamas attack coming.