"We held our fire for six hours and during that time, Hamas continued to barrage our cities with rockets," Netanyahu said. "Hamas thus shut the door to a diplomatic solution, and it therefore bears sole the responsibility for the continuation of the violence."

Former Palestinian Authority Foreign Minister Nabil Shaath said Hamas has legitimate complaints about how Israel has implemented past accords.

"Gaza is still fully under siege. And none of the agreements that have been signed before have been implemented," he told CNN's Blitzer. "But we think this is something that can be discussed later. What we should do now is proceed to an immediate stop of the Israeli attack on Gaza and, therefore, an immediate cease-fire. And we are working very hard to make that happen as soon as possible."

'We are in jail here'

Both Palestinians and Israelis say they are living in fear.

"We are forced to live in this, and there is nothing for us to do," said Abu Musbah, a, 21-year-old member of Islamic Jihad, one of the groups that is firing rockets at Israel. "The children are scared, but we struggle to continue our lives."

The Shuja'iya neighborhood of Gaza City, where Musbah lives, was like a ghost town Wednesday. Many people had fled during the night.

At the Al-Shati camp, 65-year-old Abu Ashraf said, "We are in jail here, big jail."

In the Israeli city of Ashkelon, less than 15 kilometers (less 10 miles) from the Gaza border, people live under the constant threat of rocket fire.

"It's a difficult situation," said Merav Danieli, a resident of the city. "I know that Gaza has a difficult situation also. We feel for them, we feel for them. But you can't live in your own country and someone will bomb you all the time, it's not a normal situation."

People on both sides of the conflict "deserve to live in peace and security, free from fear," President Barack Obama told reporters Wednesday. He said the United States will continue to encourage diplomatic efforts to reach a cease-fire.

'Failure is not an option'

The failed cease-fire took shape after a secret telephone call between Egypt's al-Sisi and Netanyahu coordinated by U.N. Middle East peace envoy Tony Blair, the Israeli newspaper Haaretz reported Wednesday, citing unnamed diplomatic sources.

The Egyptian plan calls for all sides to cease hostilities in Gaza, the opening of border crossings and for high-level talks among those involved.

The deal was "prepared hastily" without consulting all the parties involved, most notably Hamas, Haaretz reported, citing Western and Israeli diplomatic sources.

The effort to find a new path to a cease-fire is a "must for all of us," said Saeb Erakat, chief negotiator for the Palestinian Authority. "Failure is not an option here," he said.

U.S. Secretary of State John Kerry said the immediate need is to find a way to stop the violence.

"Our concern is to have a legitimate cease-fire and see if we can find a way to stop the conflict killing so we can get to the real issues that are underlying it," he said. "And we're doing everything in our power."