The dangers of further escalation loomed over a meeting of the Group of Seven leaders in Canada, with US President Donald Trump expressing hope on Sunday that a deal could be done but no sign of the fighting abating on a fourth day of war.
The fatalities in Israel on Monday, reported by Israel's national emergency services, raised its death toll to 23 civilians since Friday. Israeli attacks in Iran have killed at least 224 people since Friday, Iran's health ministry has said.
At least 100 more were wounded in Israel in the overnight blitz, part of a wave of attacks by Tehran in retaliation for Israel's strikes targeting the nuclear and ballistic missile programs of sworn enemy Iran.
Search and rescue operations were underway in Haifa where around 30 people were wounded, emergency authorities said, as dozens of first responders rushed to the strike zones. Fires were seen burning at a power plant near the port, media reported.
Video footage showed several missiles over Tel Aviv and explosions could be heard there and over Jerusalem.
Several residential buildings in a densely populated neighbourhood of Tel Aviv were destroyed in a strike that blew out the windows of hotels and other nearby homes just a few hundred metres from the US Embassy branch in the city which sustained minor damage.
The pre-dawn missiles also struck near Shuk HaCarmel, a popular market in Tel Aviv that typically draws large crowds of residents and tourists buying fresh fruit and vegetables, and to popular bars and restaurants. A residential street in nearby Petah Tikva and a school in ultra-Orthodox Jewish city Bnei Brak were also hit.
Iran's Revolutionary Guards said the latest attack employed a new method that caused Israel's multi-layered defence systems to target each other and allowed Tehran to successfully hit many targets, without providing further details.
The Israeli Defence Force did not immediately respond to a request for comment on the strikes. There were no reports in Israel of interceptor missiles hitting each other. Israeli officials have repeatedly said its defence systems are not 100 per cent and have warned of tough days ahead.
Israeli Defence Minister Israel Katz said in a statement: "The arrogant dictator of Tehran has become a cowardly murderer who targets the civilian home front in Israel to deter the IDF from continuing the attack that is collapsing his capabilities."
"The residents of Tehran will pay the price, and soon."
The death toll in Iran was already at least 224, with 90 per cent of the casualties reported to be civilians, an Iranian health ministry spokesperson said.
Israel's military said on Monday morning it had struck again at command centres belonging to the Revolutionary Guard and Iran's military.
G7 leaders began gathering in the Canadian Rockies on Sunday with the Israel-Iran conflict expected to be a top priority.
German Chancellor Friedrich Merz said his goals for the summit include for Iran to not develop or possess nuclear weapons, ensuring Israel's right to defend itself, avoiding escalation of the conflict and creating room for diplomacy.
Iran's President Masoud Pezeshkian told parliament on Monday Tehran has no intention of building nuclear weapons but it would continue to pursue its right to nuclear energy and research.
Before leaving for the summit on Sunday, Trump said he hoped there would be a deal, but said: "sometimes they have to fight it out."
Brent crude futures were up 0.5 per cent in Asian trade on Monday, having surged late last week. While the spike in oil prices has investors on edge, stock and currency markets were little moved in Asia.
Israel began the assault with a surprise attack on Friday that wiped out the top echelon of Iran's military command and damaged its nuclear sites, and says the campaign will escalate in the coming days.
Iran has vowed to "open the gates of hell" in retaliation.
