The IDF denied any involvement in the incident.
A security source told Ynet that Hamas was once again trying to falsely accuse Israel in a bid to drag it into the power struggle in Gaza.
According to AP, the children were all siblings, under 16, from the Abu Matrok family. The driver of the car was also killed the security officials said.
Meanwhile, Palestinian sources in Gaza reported that Hamas gunmen took over the Palestinian radio station in Gaza, confiscated the station's equipment and set the building on fire. In recent days, Hamas has accused the radio and television stations in the Palestinian Authority of cooperating with Israel.
Efrat Weiss and AP contributed to the report