Israel has agreed to a truce in Gaza, an Egyptian security source said on Sunday.

"The Israeli side has accepted," the source said, adding that Cairo was waiting for the Palestinian response, as part of Egyptian mediation efforts three days into renewed conflict in the Gaza Strip.

Since the conflict began on Friday, 31 Palestinians -- including six children -- have been killed, while 275 people have been wounded, said health authorities in the enclave where several buildings were reduced to rubble and militants fired their first rockets at Jerusalem.

The fighting is the worst in Gaza since an 11-day war last year devastated the impoverished coastal territory, home to about 2.3 million Palestinians, and forced Israelis to seek shelter from rockets.

Egypt, a historic broker between Israel and armed groups in Gaza, negotiated the ceasefire that ended an 11-day conflict in May of last year. (AFP)