Israel's foreign minister has proposed improving living conditions in Gaza in exchange for calm from the enclave's Hamas Islamist leaders, aiming to solve "never-ending rounds of violence" as the two sides exchanged fresh fire over the weekend.

The plan, which includes infrastructure and employment benefits, aims to show Palestinians in the Israeli-blockaded enclave that Hamas's campaign of violence against Israel is "why they live in conditions of poverty, scarcity, violence and high unemployment, without hope", Yair Lapid said Sunday.

He stressed that he was not calling for negotiations with Hamas, as "Israel doesn't speak to terror organisations who want to destroy us".

Lapid, due to take over as premier in two years as part of a rotation agreement, conceded that his plan does not yet amount to official policy in Israel's eight-party coalition government, but said it had support from Prime Minister Naftali Bennett.

In the first stage of the plan, the infrastructure in Gaza -- an impoverished territory of two million people -- would receive a sorely needed upgrade, Lapid said in a speech at the Reichman University in Herzliya.

"The electricity system will be repaired, gas will be connected, a water desalination plant will be built, significant improvements to the healthcare system and a rebuilding of housing and transport infrastructure will take place," he said.

"In exchange, Hamas will commit to long-term quiet," he added, noting the international community would play a role in the process, especially Egypt, to Gaza's south.

"It won't happen without the support and involvement of our Egyptian partners and without their ability to talk to everyone involved," Lapid said.

"Any breach by Hamas will stop the process or set it back," he warned.

If the first stage were to go smoothly, Gaza would then see the construction of an artificial island off its coast that would allow the construction of a port, and a "transportation link" between Gaza and the West Bank would be created.

Lapid said he had presented the plan to "partners in the Arab world," as well as to the United States, Russia and the European Union.

"There is still work to do, we're still on the drawing board, but if this plan has a chance to succeed and gains widespread support, I'll propose it to the government as the official position," he said.

Just hours after Lapid's remarks, the spectre of renewed violence flared. The Israeli army said it had intercepted a rocket launched from Gaza towards southern Israel, the third such incident in as many days.

Overnight Monday, Israel returned the attack, its fighter jets striking four Hamas military compounds and a tunnel in the Palestinian enclave, the Israeli army said in a statement.

There was no report of injuries, according to AFP's team in Gaza.

Israel and Hamas fought their last full-scale war in May, the fourth since 2008. The conflict ended in an Egyptian-brokered ceasefire.

The UN High Commissioner for Human Rights said in late May that Israeli air strikes on the territory had resulted in "the widespread destruction of civilian infrastructure".