Iran had repeatedly threatened to strike Israel in retaliation for a deadly April 1 air strike on its Damascus consular building and Washington had warned repeatedly in recent days that the reprisals were imminent.

"Iran launched UAVs from its territory towards the territory of the state of Israel," military spokesman Rear Admiral Daniel Hagari said in a televised statement.

"We are working in close cooperation with the United States and our partners in the region in order to act against the launches and intercept them," he said.

Iran's Revolutionary Guards confirmed a retaliatory drone attack against Israel was under way. While state media said "drones and missiles" had been launched.

The White House said it expected the Iranian drone attack to "unfold over a number of hours".

It said Washington would "stand with the people of Israel" as Iran attacks.

- Airspace closing -

The army statement came shortly after Prime Minister Benjamin Netanyahu said Israel was prepared for a "direct attack from Iran".

"Our defence systems are deployed, we are prepared for any scenario, both in defence and attack," the Israeli premier said in a televised statement, adding Israel had the backing of the United States and "many" other countries.

Iran's Revolutionary Guards had already seized an Israeli-linked container vessel in the Gulf earlier on Saturday, putting the whole region on alert.

Israel said it was closing schools nationwide while Jordan and Iraq, which lie between Iran and Israel, announced they were temporarily closing their airspace.

Israel said it would close its own airspace from 2130 GMT.

Shortly after the ship seizure, the Israeli military warned Iran it would suffer the "consequences for choosing to escalate the situation any further".

The April 1 strike in Damascus, which killed 16 people, including two Iranian generals, had been widely blamed on Israel. Iran had repeatedly vowed to hit back, but had not specified how.

Iran's Revolutionary Guards seized a container ship "related" to Israel in the Strait of Hormuz on Saturday, which was now heading towards Iranian waters, Iranian state media reported.

The ship's operator, the Italian-Swiss group MSC, said it was working with the relevant authorities to ensure the wellbeing of the 25 crew onboard.

Both Israel and the United States denounced the seizure as piracy, with Israel also demanding that the Guards be declared a "terrorist organisation" by the European Union.

In Washington, National Security Council spokeswoman Adrienne Watson called on Iran "to release the vessel and its international crew immediately".

"Seizing a civilian vessel without provocation is a blatant violation of international law, and an act of piracy", she said.

President Joe Biden cut short a weekend trip to his home state of Delaware for urgent consultations in Washington, the White House said.

Israeli Foreign Minister Israel Katz postponed a planned visit to Hungary and Austria, his spokesman said.

An adviser to Iran's supreme leader said that Israel was in "complete panic" over Tehran's looming response.

"They don't know what Iran wants to do, so they and their supporters are terrified," senior adviser Yahya Rahim said.

- Gaza truce stalemate  -

The Gaza war began with Hamas's unprecedented October 7 attack against Israel which resulted in the deaths of 1,170 people, mostly civilians, according to Israeli figures.

Israel's retaliatory offensive has killed at least 33,686 people in Gaza, mostly women and children, according to the territory's health ministry.

Israel's military said it had struck more than 30 Hamas targets across Gaza.

In the main central city of Deir al-Balah, fire burned in the rubble of a destroyed mosque.

Israel's military "demanded that the whole area be evacuated" before it was "wiped out in minutes", said Abdullah Baraka, a witness.

In nearby Nuseirat refugee camp, Abd Thabet said residents had been warned to evacuate on Friday evening ahead of a large explosion that caused "massive destruction".

"All of the houses were demolished, including my home," the 35-year-old told AFP.

Tensions have also flared in the Israeli-occupied West Bank, where a missing Israeli teenager was found dead on Saturday.

After the boy went missing near the city of Ramallah on Friday, hundreds of Jewish settlers backed by Israeli forces raided nearby Palestinian villages, torching cars and homes, leaving at least one villager dead and dozens injured.

Hamas said it had submitted its response to a Gaza truce plan presented by US, Qatari and Egyptian mediators at talks in Cairo this week.

The Palestinian militant group said it was sticking to its previous demands, insisting on "a permanent ceasefire" and the "withdrawal of the occupation army from the entire Gaza Strip".

The Israeli prime minister's office accused Hamas of torpedoing efforts for an exchange of hostages for prisoners.

"Hamas to this day has refused any deal and any compromise proposal," it said.

Washington has ramped up pressure on Netanyahu to increase aid flows to Gaza where the United Nations warns of imminent famine.

During the October attack, Hamas militants seized about 250 hostages, 129 of whom Israel says remain in Gaza, including 34 the army says are dead.