Two Palestinian children were killed and a third was critically wounded on Wednesday in a blast in northern Gaza, and the Israeli military acknowledged firing at rocket launchers there.

The area, which is populated by civilians, is frequently used by Palestinian militants to launch rocket attacks against southern Israel.

Dr. Moaiya Hassanain of the Palestinian Health Ministry said 10-year-old Mahmoud Ghazal and his 12-year-old cousin Yehiya Ghazal were killed. Their 10-year-old cousin Sara Ghazal was critically injured, he said.

Witnesses said there were rocket launchers in the area. The Israeli military said its forces saw people handling the launchers and opened fire on them. The military charged that this was not the first time Palestinian militants have employed children in their attacks against Israel.

A relative of the children, Wasfi Ghazal, said he heard the sound of an explosion and then children screaming. He held both Israel and the militant rocket squads responsible.

"We are victims of the occupation and victims of the misbehavior of some of the fighters who are randomly choosing our area to target Israel," he told The Associated Press.

In a statement, the Israeli military said it "wishes to express sorrow" for the "use of teenagers in terror attacks."

Palestinian negotiator Saeb Erekat, an adviser to President Mahmoud Abbas, said the killing of children is unjustifiable, and condemned it in the "strongest possible terms."

"I think violence breads more violence, and hatred. This will add to the complexities and feed the fire," he said.

In Gaza, Hamas spokesman Taher Nunu called the Israeli attack a "war crime" and called on Abbas to halt his meetings with Israeli Prime Minister Ehud Olmert. The two met on Tuesday.

Many Palestinian civilians have been killed in past Israeli attacks aimed at militants. The most serious incident was Nov. 8, 2006, when 18 civilians, including eight children, were killed by Israeli shells. Israel announced halt to shelling in Gaza after that.