Eleven Palestinians, including two children, were killed on Tuesday after Israel Air Force-fired missiles struck an Islamic Jihad terror cell on its way to launch long-range Katyusha-type (Grad) rockets at Israel. Among the dead were three known terrorists, including Hamoud Wadiya, Islamic Jihad's top rocketeer. A total of 20 others were wounded. The air strike came at around 11 a.m. when eyewitnesses said they saw an IAF helicopter fire one missile at a van driving down Salah A-Din Street on the northern outskirts of Gaza City. The missile missed its target and the van spun out of control hitting the curb. The IDF decided to launch a second missile but by this time a crowd of onlookers had gathered around the van. The second missile struck the Grad-laden vehicle, causing the large number of casualties. [For a Jerusalem Online video of events click here] With tears streaming down her face and her veil soaked with blood, Hekmat Mughrabi said her 30-year-old son, Ashraf, and a 13-year-old family member died when one of the missiles hit the curb outside her home. She and her son were chatting inside when they heard the boom from the first missile. The young man ran to the door of the house after the initial explosion, seeking to calm down the family's children. "He was shouting to the kids, 'Don't be afraid, don't be afraid,'" and hadn't even finished his sentence when the second missile hit, she said. "My son died in my arms." Shrapnel from the blast flew into the house, wounding several other family members, she added. But the IDF defended its decision to launch the second missile claiming that a crowd had yet to gather around the car when it was initially fired. "Unfortunately the first missile missed the van and knowing that the rockets were inside we decided to launch a second one [missile] knowing then that no one was there," explained Chief of Staff Lt.-Gen. Dan Halutz. However, seven seconds however before the missile hit its target, people began to surround the vehicle but by then it was already too late. "We send our sympathy to the families and are sorry that innocent people were harmed," Halutz said Tuesday night. "But we need to understand the context, which is the massive barrage of rockets at Israel... we are not willing to sacrifice [Israeli] people for the sake of terrorists." The IDf Spokesman showed footage of gunmen removing rockets from the van. The cell, security officials said, was behind three previous Grad rocket attacks on Israel and its elimination would severely impair the group's ability to continue firing the long-range rockets. "The Grad is a strategic weapon that can carry a heavier payload and has a 20-kilometer range," one official said. "It can reach beyond Ashkelon and stop traffic on the highway to Tel Aviv. This is not merely a tactical weapon like the Kassams used against Sderot." The official said that the missiles were being deployed by Islamic Jihad-affiliated operatives, and that Islamic Jihad takes its orders from Teheran and Damascus. "We want to minimizes civilian casualties as much as possible, but if they transport weapons like this in a densely populated area then they bear the responsibility for the results. The responsibility rests with the Hamas government which endorses, encourages and supports terrorism against Israelis," the official said. IAF Commander Maj.-Gen. Eliezer Shkedy also responded to the results of the missile strike claiming that "in war people who are not involved can get hurt." Islamic Jihad threatened to step up its attacks against Israel. "The Zionist enemy insists on shedding Palestinian blood and we insist on going ahead with our holy war and resistance," said Khader Habib, a group leader in Gaza. "God willing, the resistance groups... will deliver a harsh response. All options are open." Palestinian Authority President Mahmoud Abbas also condemned the air strike, calling it "state terrorism." He also accused Israel of trying to "wipe out the Palestinian people." The strike took place just hours before an IDF probe investigating the deaths of seven Palestinian civilians on a Gaza beach on Friday exonerated the IDF and said that the blast was likely caused by a mine planted by Palestinian terror groups. Had the cell members succeeded in firing the Grad, it would have been the fourth time since March that such long-range Katyusha-type rockets were fired at Israel from the Gaza Strip. On March 28, Election Day, a Grad landed in an open field. In April, a rocket struck the chicken coop at Kibbutz Netiv Ha'asara. While Grad fire from Gaza remains relatively rare, over 100 Kassam rockets have been launched at Israel since the weekend, wounding two Israelis in Sderot and causing damage to a number of buildings. Herb Keinon and AP contributed to the report.