The Israeli military said it had sealed off all the main roads around the Gaza border, declaring the area a closed military zone, in the latest sign that Israel's patience with the rocket fire was at an end and it was poised to launch its first ground offensive on the territory since 2008-9.
An AFP correspondent reported seeing tanks massed along the frontier, and a steady stream of reservists arriving throughout the day.
US President Barack Obama reiterated US support for Israel's right to defend itself during a call with Israeli Prime Minister Benjamin Netanyahu about the conflict in Gaza.
New Israeli air strikes on Gaza on Friday night killed six Palestinians, raising the toll in two days of violence to 30, a Hamas health ministry spokesman said.
An Israeli military spokesman said one strike destroyed a Hamas military drone production workshop.
Israeli ministers approved the call-up of as many as 75,000 reservists as Netanyahu held late evening talks at the defence ministry in Tel Aviv with his inner circle, Channel Two television reported.
The military wing of the Islamist Hamas movement that rules Gaza said it fired the rocket at Jerusalem, the first from the territory ever to strike the outskirts of the Holy City.
It marked a major escalation by Hamas in the face of a deadly pounding since Wednesday by Israeli aircraft that has sparked outrage across the Arab and Islamic world.
A rocket attack also killed three Israelis.
Neither rocket on Friday caused casualties or damage, police said, but they sowed panic in both of the Jewish state's main population centres, setting off warning sirens and sending people scurrying to shelters.
One hit a Jewish settlement bloc in the occupied West Bank just south of Jerusalem, which is home to many commuters.
"A rocket fired from Gaza hit an open area outside of Jerusalem, causing no injuries or damage," an army spokesman told AFP.
Police said it hit in the Gush Etzion bloc of settlements that stretches south of Jerusalem past Bethlehem from just five kilometres (three miles) beyond the city limits.
A second rocket crashed into the sea off Tel Aviv "some 200 metres (yards)" from the beachfront US embassy, sending beachgoers fleeing, an eyewitness told AFP.
The two rockets were the farthest Gaza militants have ever fired into Israel, exceeding even the 60 kilometres (36 miles) achieved by a rocket that hit the sea off Jaffa, just south of Tel Aviv, on Thursday.
UN and Palestinian officials said UN chief Ban Ki-moon would travel to the region in days to push for a truce.
"Ban went to the region during the last Israeli offensive against Gaza in 2009 and worked hard to end that conflict. He is looking to produce a truce and ceasefire this time as well," one senior UN diplomat said.
Preparing all the military options
Even before the latest rocket fire, senior cabinet minister Moshe Yaalon warned that Israel was poised for a ground offensive.
"We are preparing all the military options, including the possibility that forces will be ready to enter Gaza in the event that the firing doesn't stop," he said.
As ground troops massed, there was no let-up in Israeli air attacks.
A child was among the dead reported by the territory's emergency services on Friday, two of whom were brought in to Gaza City's Shifa hospital as Egyptian Prime Minister Hisham Qandil toured the wards on an unprecedented solidarity visit.
Israel denied its aircraft had killed the pair.
Qandil kissed the dead body of four-year-old Mohammed Yasser, voicing outrage at his loss.
"This tragedy cannot be tolerated, and the whole world bears the responsibility to stop the aggression," he said.
The overthrow early last year of veteran strongman Hosni Mubarak, a staunch supporter of Egypt's three-decade-old peace treaty with Israel, has cast a chill over the already lukewarm relationship between the two neighbours.
Egypt's new Islamist President Mohamed Morsi, who like Hamas has his roots in the Muslim Brotherhood, has moved to establish closer relations with the Gaza authorities.
Washington appealed to Egyptian leaders as well as to allies such as Turkey to use their sway with the Palestinians in a flurry of telephone diplomacy aimed at containing the crisis.
President Obama called Turkish Prime Minister Recep Tayyip Erdogan while Secretary of State Hillary Clinton spoke twice with her Egyptian counterpart Mohammed Amr and also with Jordan's King Abdullah II.
"In all of the conversations that she has had... we all agree on the need to de-escalate this conflict," State Department spokeswoman Victoria Nuland.
In Obama's call to Netanyahu, the president "reiterated US support for Israel's right to defend itself, and expressed regret over the loss of Israeli and Palestinian civilian lives", the White House said in a summary of the conversation.
Netanyahu, who initiated the call, expressed his deep appreciation for US investment in the Iron Dome rocket and mortar defense system, "which has effectively defeated hundreds of incoming rockets from Gaza and saved countless Israeli lives", according to the readout.