Hospital officials told AP that the Palestinians, including an official of the armed wing of Hamas, were killed in the explosion after dawn in an area close to the Israel border.
Three people were seriously wounded in the blast, hospital officials said, while residents told AP the house belonged to a family of Hamas activists.
Palestinians told AP the house was hit by an Israeli tank shell, while Palestinian security officials reported Israeli attack helicopters were firing machine-guns in the area.
The Israeli military had no immediate comment.
Refugee camp pull-out
Before dawn today, Israeli forces pulled out of the Maghazi refugee camp in the central Gaza Strip.
Reuters reported that the Israeli forces were now massing on the border ahead of a possible new incursion against the nearby Bureij refugee camp, a stronghold of militants from the governing Islamist faction Hamas.
After two days of battles in the Maghazi camp, Israeli forces left behind considerable destruction, levelling farmland, tearing up water pipes and knocking down electricity wires.
Residents said some people in the camp of 22,000 were trapped in their houses by embankments the Israelis built as tank emplacements.
Fifteen Palestinians detained by Israeli forces for questioning were released before the troops pulled out, the residents said.
The three day sweep killed up to 15 people, most of them militants, as part of a relentless offensive in Gaza.
The Israeli military confirmed that the incursion was over, but
Israeli forces would continue operating there and in other places
in the coming days in its campaign against Gaza militants.
Earlier, Israel warned Palestinian civilians in the Gaza Strip that homes storing weapons were now a target.
“The life of all those who are holding military equipment and ammunition in their homes is in danger and they should leave the premises for their safety and that of their families,” Israeli leaflets dropped on Gaza warned.
“The Israeli defence force will strike and destroy all sites and buildings housing ammunition and military materiel.”
The warning came as three Palestinians, including one militant from the armed wing of the governing party Hamas, were hit in an Israeli air strike on the Maghazi refugee camp.
An Israeli army spokesman said an air strike killed the militant as he was preparing to launch an anti-tank rocket at Israeli troops in the refugee camp.
A 16-year-old boy died after being shot through the heart and a national security officer was killed by Israeli fire and tank shelling in the refugee camp.
A 10-year-old girl died of wounds sustained when the assault began on Wednesday, medics said. Her mother died in the attack.
Israeli soldiers killed
The Israeli military confirmed four soldiers were killed in fighting with Hezbollah guerrillas in southern Lebanon on Thursday, in a revised death toll issued Friday.
The latest deaths bring to 18 the number of servicemen killed since the flare-up in cross-border violence on July 12 when Hezbollah snatched two soldiers in a deadly border raid.
Another 15 civilians have been killed in Hezbollah rocket attacks, bringing the total dead to 33.
Another five soldiers were wounded during the heavy fighting on Thursday north of the village of Avivim in southern Lebanon, the military said.
The military said there had been no reports of any clashes in southern Lebanon involving soldiers on Friday.
In a separate incident, a serviceman was killed when two helicopters collided over Israel near the Lebanese border late Thursday.
The accident left another three soldiers wounded.