CAIRO/JERUSALEM, Jan 7 (Reuters) - An Israeli airstrike killed at least two Palestinians in Gaza on Wednesday, local health authorities said, in what the military said was a retaliatory attack on a Hamas militant that was launched after its troops had come under fire.

Medical officials did not immediately identify the people killed. They said several people were also wounded in the airstrike, which struck a house in Gaza City. There was no immediate comment from Hamas.

The Israeli military said that Hamas militants had shot at soldiers earlier on Wednesday and that the airstrike targeted a senior Hamas militant who had directed attacks on its troops. The military did not say whether it had suffered any casualties.

Separately on Wednesday, in the southern Gaza area of Rafah, an Israeli-backed Palestinian militia said that it had killed two Hamas men, marking a renewed challenge to the militant group.

Nearly all of Gaza's 2 million people live in Hamas-held areas, where the group has been reestablishing its grip and where four Hamas sources said it continues to command thousands of men despite suffering heavy blows during the war.

But Israel still holds well over half of Gaza - areas where Hamas' foes operate beyond its reach. With U.S. President Donald Trump's plan for Gaza moving slowly, there is no immediate prospect of further Israeli withdrawals.

Fighting has greatly abated since Israel and Hamas agreed to a ceasefire in October after two years of war, but it has not stopped entirely. Both sides have accused each other of violations of the ceasefire.

More than 400 Palestinians, most of them civilians according to Gaza health officials, have been killed since the truce began, as well as three Israeli soldiers.

(Reporting by Maayan Lubell in Jerusalem and Nidal al-Mughrabi in CairoEditing by Frances Kerry)