* Israel says major operation may last days

* Does not rule out ground invasion of Gaza

* Hamas, militant groups vow to fight

* First target was Hamas commander

* Southern Israel braced for Gaza rockets

By Nidal al-Mughrabi

GAZA, Nov 14 (Reuters) - Israel launched a major offensive against Palestinian militants in Gaza on Wednesday, killing the military commander of Hamas in an air strike and threatening an invasion of the enclave that the Islamist group vowed would "open the gates of hell".

The onslaught shattered hopes that a truce mediated on Tuesday by Egypt could pull the two sides back from the brink of war after five days of escalating Palestinian rocket attacks and Israeli strikes at militant targets.

Operation "Pillar of Defence" began with a surgical strike on a car carrying the commander of the military wing of Hamas, the Islamist movement which controls Gaza and dominates a score of smaller armed groups.

Within minutes of the death of Ahmed Al-Jaabari, big explosions were rocking Gaza, as the Israeli air force struck at selected targets just before sundown, blasting plumes of smoke and debris high above the crowded city.

Panicking civilians ran for cover and the death toll mounted quickly. Seven people including two girls under the age of five were killed, the health ministry said.

A second Gaza war has loomed on the horizon for months as waves of Palestinian rocket attacks and Israeli strikes grew increasingly more intense and frequent.

Israel's Operation Cast Lead in 2008-2009 began with a week of air attacks and shelling, followed by a land invasion of the blockaded coastal strip, sealed off at sea by the Israeli navy. Some 1,400 Palestinians were killed and 13 Israelis died.

Hamas said Jaabari, who ran the organisation's armed wing, Izz el-Deen Al-Qassam, died along with an unnamed associate when their car was blown apart by an Israeli missile.

The charred and mangled wreckage of a car could be seen belching flames, as emergency crews picked up what appeared to be body parts.

GATES OF HELL

Israel confirmed it had carried out the attack and announced there was more to come. Reuters witnesses saw Hamas security compounds and police stations blasted apart.

"This is an operation against terror targets of different organisations in Gaza," Israeli army spokeswoman Colonel Avital Leibovitch told reporters.

Jaabari had "a lot of blood on his hands", she said. Other militant groups including Islamic Jihad were on the target list.

Immediate calls for revenge were broadcast over Hamas radio.

"The occupation has opened the gates of hell," Hamas's armed wing said. Smaller groups also vowed to strike back.

"Israel has declared war on Gaza and they will bear the responsibility for the consequences," Islamic Jihad said.

Southern Israeli communities within rocket range of Gaza were on full alert, and schools were ordered closed for Thursday. About one million Israelis live in range of Gaza's relatively primitive but lethal rockets, supplemented in recent months by longer-range, more accurate systems.

"The days we face in the south will, in my estimation, prove protracted," Brigadier-General Yoav Mordechai, Israel's chief military spokesman, told Channel 2 TV.

"The home front must brace itself resiliently."

Mordechai said Israel was both responding to a surge in Palestinian rocket salvoes earlier this week and trying to prevent Hamas and other Palestinian factions from building up their arsenals further.

Among the targets of Wednesday's air strikes were underground caches of longer-range Hamas rockets, he said.

Asked if Israel might send in ground forces, Mordechai said: "There are preparations, and if we are required to, the option of an entry by ground is available."

HAMAS EMBOLDENED

Israel's intelligence agency Shin Bet said Jaabari was responsible for Hamas' takeover of the Gaza Strip in 2007, when the militant Islamist group ousted fighters of the Fatah movement of its great rival, the Western-backed Palestinian president Mahmoud Abbas.

It said Jaabari instigated the attack that led to the capture of Israeli Corporal Gilad Shalit in a kidnap raid from Gaza in 2006. Jaabari was also the man who handed Shalit over to Israel in a prisoner exchange five years after his capture.

Israel holds a general election on Jan. 22 and conservative Prime Minister Benjamin Netanyahu has pledged to retaliate harshly against Hamas.

Hamas has been emboldened by the rise to power in neighbouring Egypt of its spiritual mentors in the Muslim Brotherhood, viewing them as a "safety net" that will not permit a second Israeli thrashing of Gaza, home to 1.7 million Palestinians.

Egypt condemned Israel's strikes on Gaza and urged it to end the attacks at once.

Hamas has historically been supported by Iran, which Israel regards as a rising threat to its own existence due to its nuclear programme.

In the flare-up that was prelude to Wednesday's offensive, more than 115 missiles were fired into southern Israel from Gaza and Israeli planes launched numerous strikes.

Seven Palestinians, three of them gunmen, were killed. Eight Israeli civilians were hurt by rocket fire and four soldiers wounded by an anti-tank missile.

Helped by Iran and the flourishing contraband trade through tunnels from Egypt, Gaza militias have smuggled in better weapons since the war of 2008-09.

But Gaza's estimated 35,000 Palestinian fighters are still no match for Israel's F-16 fighter-bombers, Apache helicopter gunships, Merkava tanks and other modern weapons systems in the hands of a conscript force of 175,000, with 450,000 in reserve.

Israel's shekel fell nearly one percent to a two-month low against the dollar on Wednesday after news of the Israeli air strikes broke.

Earlier, Israel killed the head of the Hamas military wing, Ahmed Jabari, in an airstrike. In all, Palestinian officials say six people have been killed in the Israeli attacks.

Israel says the airstrikes are the beginning of a broader operation, launched in response to days of heavy rocket fire from Gaza.