hit the 19th century Anglican chapel in the Ahli Hospital compound.
Elsewhere in the West Bank troops killed a Palestinian mother and her son in unclear circumstances after one of them fired on an army outpost, Israeli officials said.
However witnesses claimed the two Palestinians tried to avoid a military checkpoint on their way into Nablus to buy groceries.
It came as Israeli helicopters fired 11 missiles in Gaza City in an apparent response to Thursday’s killings of three Israeli soldiers by Palestinians in the hills of Hebron, a town known for tensions with Jewish settlers.
Church officials said at least one missile hit the Anglican compound, punching holes in the roof and the stone floor near the altar and covering an icon of the Virgin Mary with debris. Non of the 40 patients in the adjacent Anglican hospital were reportedly harmed, but Palestinians said at least six people were wounded in Gaza City.
"This is an act of terrorism against our church," the Associated Press (AP) quoted Anglican Church Bishop Riah Abu Assal as saying. "Its location next to the hospital is well known. There is no room for mistakes, and they (Israeli military Officials) didn’t even bother to issue a statement to express their regret," he said as smoke rose from the chapel.
A merchant living near the hospital compound, which includes a free clinic for refugees, a nursing school and an emergency ward, told AP he watched from his window as the missile struck.
"I saw a big flame coming from the sky toward me and getting very close," said Fuad Awad, 52. "I ran from the window and lay on the floor next to my bed and heard an explosion that shook my house."
It was unclear what prompted the attack against the Anglican compound, as Israel has in the past tried to avoid attacking Christian sites.
The policy led to a near 40 day standoff last year around the Church of the Nativity in Bethlehem, with Palestinian gunmen hiding inside and Israeli troops surrounding the area.
In addition to the Anglican compound, several metal workshops were hit, which Israel has often accused of producing weapons for suicide bombers and other militants. Islamic militants reportedly retaliated by firing three crude rockets at an Israeli desert town.
Analysts have said the increase of violence is expected to boost support for Prime Minister Ariel Sharon, who faces a general election January 28.
Sharon has pushing for a more hardline policy towards alleged Palestinian militants and his Likud party is likely to beat the opposition Labor party in next weeks ballot.