TEL AVIV/GAZA (Reuters) - Israel on Thursday said it will stop shipments of fuel into Gaza in response to Palestinians in the enclave launching incendiary balloons that have torched tracts of farmland on the Israeli frontier.

Militants in Islamist Hamas-ruled Gaza in recent days have launched dozens of helium balloons laden with incendiary material in a bid to pressure Israel to ease its blockade of the Strip and allow new economic projects.

Israel, which cites security threats from Hamas for its land and naval blockade, had earlier retaliated by closing the Strip's main commercial crossing and striking Hamas military facilities with warplanes, attack helicopters and tanks.

Escalating the measures on Thursday, Defence Minister Benny Gantz ordered a halt to fuel imports into Gaza "in light of the continued launching of incendiary balloons from the Strip" towards Israel, the defence ministry said in a statement.

Hamas spokesman Fawzi Barhoum called the measure a "grave act of aggression" that "aims to worsen the crisis of our people in the blockaded Strip". The Mediterranean coastal enclave relies on Israel for most of its fuel and gas.

A ceasefire deal brokered last year by Egypt, Qatar and the United Nations following a deadly surge in violence was to see Israel allow new development projects, including an industrial zone and a hospital.

Hamas has accused Israel of not fully complying with those understandings. Israel, which deems Hamas a terrorist organisation, shuns direct negotiations and has never publicly acknowledged the deal.

On Wednesday, Israel reduced the area where it permits Palestinians to fish from 15 miles (24 km) to eight miles (13 km), calling it a response to the balloon launches.

(Reporting by Rami Ayyub in Tel Aviv and Nidal al-Mughrabi in Gaza; Editing by Robert Birsel)