The fighting came as Egyptian mediators were trying to extend a cease-fire between the bitter enemies, which last fought a war in 2014.
"In keeping with the public interest, the commission has made a decision to exceptionally postpone its activities scheduled for this day", the body which organizes the protests said in a statement.
This is a breaking news story and is constantly being updated. No injuries were reported on the Israeli side.
The Israeli military says it has begun attacking sites in the Gaza Strip in response to a rocket attack on Tel Aviv.
Sirens rang out in southern Israel early Friday and the Israeli military said it identified four "launches" from the Gaza Strip.
An informal truce between Hamas and Israel had led to relative calm, but recent weeks have seen another uptick in violence.
In addition, an underground compound to produce rockets was destroyed, several military compounds were attacked as well as a Hamas naval post which is also used to manufacture weapons, the IDF spokesperson reported.
Israel said a preliminary investigation had concluded that the group was behind the rocket fire.
Nine rockets were fired by Palestinians into Israeli territory overnight and into Friday morning, with the IDF reporting that six rockets were intercepted by the Iron Dome missile defense system.
The late-night attack Thursday on Tel Aviv, Israel's densely populated commercial and cultural capital, marked the first time the city had been hit since a 2014 war between Israel and Gaza militants.
The escalation on Thursday followed a day of unrest in Gaza, where Hamas, the militant group that controls the Palestinian enclave, had forcibly put down demonstrations against deteriorating living conditions.
Netanyahu called an emergency meeting with top security officials, after which Israel mounted its response.
Islamic Jihad, another Iranian-backed terror group in Gaza with a large rocket arsenal, also denied firing the rockets.
In an unusual step that indicated Hamas was attempting to prevent further escalation, the Hamas Interior Ministry said the rocket fire went "against the national consensus" and promised to take action against the perpetuators. The Egyptians left Gaza late on Thursday.
Danon slammed Hamas saying it uses civilians "as human shields" and that "a terrorist organization that tries to harm Israel will encounter a relentless and uncompromising force".