The military wing of the Islamist Hamas movement which rules Gaza said it fired the rocket at Jerusalem, the first to strike the outskirts of the Holy City in the history of the Israeli-Palestinian conflict.
It marked a major escalation by the territory's Hamas rulers in the face of a deadly pounding since Wednesday by Israeli aircraft that has killed 23 Gazans and sparked outrage across the Arab and Islamic world.
Neither rocket caused any casualties or damage, police said, but they sowed panic in both 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 sea off Tel Aviv "some 200 metres (yards)" from the beachfront US embassy, sending beach-goers 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.
As the rockets hit, the first of 16,000 reservists already called up by the Israeli army were joining their units but in their wake Defence Minister Ehud Barak ordered thousands more to turn up for duty.
"The Defence Minister has this evening ordered the mobilisation of new reserve forces," his spokesman Josh Hantman told AFP as warnings intensified of a looming ground offensive to root out the rocket launchers that now have most of Israel's population in their sights.
An AFP correspondent on the Israeli side of the Gaza border reported seeing tanks massed along the frontier, and a steady stream of reservists arriving for duty.
Speaking before the latest rocket fire, senior cabinet minister Moshe Yaalon warned that Israel was already poised for a major ground offensive like that which it launched in December 2008-January 2009.
"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 the Israeli air offensive on Gaza.
A child was among the two latest victims reported by the territory's emergency services, who were both brought in to Gaza City's Shifa hospital as Egyptian Prime Minister Hisham Qandil toured the wards on an unprecedented solidarity visit to the Hamas-ruled territory.
Israel denied its aircraft had killed the pair but Qandil leant forward and kissed the dead body of four-year-old Mohammed Yasser voicing outrage at his loss.
"What I saw today in Gaza, at the hospital, with the martyrs, cannot be met with silence," the Egyptian premier said.
"This tragedy cannot be tolerated, and the whole world bears the responsibility to stop the aggression."
Egypt's Islamist President Mohamed Morsi hammered home the message of support soon after his prime minister ended the lightning visit.
"Egypt will not leave Gaza on its own... What is happening is a blatant aggression against humanity," Morsi 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.
Morsi, who like Hamas has his roots in the Muslim Brotherhood, has moved to establish closer relations with the Gaza authorities.
World governments concerned about the upsurge of violence had appealed to Egyptian leaders to use their influence with Hamas to prevent any fresh downward spiral.
US deputy State Department spokesman Mark Toner said he hoped the Egyptian prime minister would deliver a message to halt the rocket fire.
President Vladimir Putin told Morsi in a telephone call that Russia supported Egypt's efforts to halt the upsurge in violence since Israel killed Hamas military chief Ahmed Jaabari in an air strike on Gaza City on Wednesday.
But as Qandil arrived, Hamas announced it had fired a new salvo of rockets at the Jewish state despite Israel's offer of a temporary truce for the brief visit.