Israelis in Jerusalem said Sunday Iran's overnight missile and drone attack was "frightening", but they were confident in their country's defences -- and some called for retaliation.

The city awoke to no noticeable difference in the main market or at its main train and bus stations.

Israel said it had "foiled" the unprecedented direct Iranian attack with the help of the United States and allies, but residents said they were worried.

"The situation is frightening because we are afraid of what happens and all of the bombing and aircraft that are coming," said 48-year-old Ayala Salant, a resident of Jerusalem.

"However, we are very, very happy with the alliance that helped us because most of the aircraft and missiles have not arrived to Israel. We hope that there will be a stop to this ongoing escalation soon."

Yishai Levi, 67, said that Israel "once again proved technological... superiority, and handled it impressively".

The attack which began late Saturday followed repeated Iranian threats to retaliate against Israel for a deadly April 1 strike on Tehran's Damascus consular building.

It marks a major escalation in the long-running covert war between the regional foes and comes against the backdrop of the ongoing war between Israel and the Palestinian militant group Hamas in the Gaza Strip.

But Sharin Avraham, 31, said "fighting against a state is a different war" and required a response from Israel.

"Iran's attack should not go quietly," she told AFP. "We have to respond because Iran is a country."

"The state of Israel needs to show it that we are strong and this is not something that can simply pass. We are not the world's punching bag."

Gil, a 30-year-old Jerusalem resident who only gave his first name, said there was "no great fear."

"It was nice to see that the West did stand by us and helped with interceptions," he said.

But in northern Israel, near the restive border with Lebanon, residents told AFP they were afraid.

"We are not on an island. There are people around us that we fear for," said Waheb Khalayla, 68, from the Galilee town of Majd al-Krum.

"We are afraid of a war breaking out, it will affect daily life and economic livelihood," the retired nurse said.

Iran's proxies and allies also carried out coordinated attacks on Israeli positions as sirens sounded in many places and AFP correspondents heard blasts in the skies above Jerusalem early Sunday.