A deadly flare-up in fighting between Israel and Gaza's terrorist Hamas group subsided on Thursday after Egypt helped to restore calm ahead of a major Muslim holiday.

"The cease-fire was brought about because Hamas suffered serious blows and asked for a cease-fire," Strategic Affairs Minister Moshe (Bogie) Ya'alon told Israel Radio on Thursday.

Weeks of simmering violence had intensified on Tuesday night, when rocket fire from Gaza drew Israeli airstrikes that killed two Palestinian terrorists. On Wednesday, terrorists in Gaza fired some 80 rockets and mortars at southern Israel, and Israeli aircraft struck Gaza four times. In all, four Palestinians, including three terrorists, were killed in the fighting and two foreign workers in Israel were critically wounded.

The rocket and mortar fire stopped altogether overnight, though one mortar landed in southern Israel on Thursday morning, causing no damage. The Israel Defense Forces said it last struck Gaza on Wednesday morning. The violence ebbed as Muslims began preparing for the Eid al-Adha holiday, which begins on Friday.

Both sides confirmed Egyptian involvement in ending the fighting.

Israeli defense official Amos Gilad told Army Radio on Thursday that Egyptian security forces had "a very impressive ability" to convey to the terrorists that it was in their "supreme interest not to attack."

Hamas spokesman Ayman Taha says Egypt conveyed Israel's desire to contain the violence. He says Hamas told Egypt that terrorists would accept a cease-fire if Israel would.

"The situation in towns bordering Gaza is horrendous," Noam, a resident of the Eshkol region in the south, told Israel Hayom on Wednesday. "It seems like a war. The rocket fire does not let up and, despite all the talks, continues to escalate. It's very sad that we live like this on a daily basis."

The massive barrage began in the early hours of Wednesday when several rockets were launched from Gaza at towns in the Eshkol region. Three people were injured when a rocket exploded in the chicken coop in which they were working. Two of them were in serious condition and a third sustained light injuries. A woman was also lightly injured when she ran from her home to a protected structure.

Eight homes, in five different southern towns, took direct hits during the rain of rockets on Wednesay. The Iron Dome anti-rocket defense system intercepted eight other rockets.

Educational institutions in areas under fire were closed for the day on Wednesday. As calm was restored later in the day, educational institutions consulted with the Homefront Command and decided that all schools would open on Thursday.

"This is a war. The fact that it was decided to shut down the schools was an unusual move that severely disrupted the routine life of town residents," Abraham Cohen, an Eshkol region resident, said.

Meanwhile, Sderot Mayor David Buskila began a hunger strike outside the Prime Minister's Office in Jerusalem on Wednesday as part of his public campaign against the Finance and Interior Ministries.

"I am fighting against the unresponsiveness of the government, which is slashing budgets and abandoning its commitments," Buskila said.

The government has been consistently reducing the Sderot municipality budget and city funding over the past few years. It has also forced an austerity program on the municipality.

A statement by the Interior Ministry said, "The ministry is helping the Sderot municipality."