JERUSALEM/GAZA/CAIRO- Israel and Palestinian militant groups in the Gaza Strip have reached a cease-fire agreement to end eight days of fighting, Egyptian Foreign Minister Mohamed Kamel Amr announced in the Egyptian capital of Cairo on Wednesday afternoon.

The truce, brokered by Egypt, takes effect at 09:00 pm Gaza time (19:00 GMT) on Wednesday.

A Palestinian youth plays with firework as he celebrates what Palestinians say is a victory over Israel after an eight-day conflict in Gaza City Nov 21, 2012. [Photo/Agencies]

Amr announced the cease-fire at a joint press conference with visiting US Secretary of State Hillary Clinton after their meeting. Praising the efforts of Egyptian President Mohamed Morsi to promote peace in the region, Clinton said "Washington welcomes the cease-fire agreement" and the stopping of violence.

Israeli Prime Minister's Office confirmed on Wednesday evening that a cease-fire agreement has been reached. Israeli Prime Minister's chambers said that by accepting the truce offer, Israel is "giving a chance to stabilize the region before there is a need to execute excessive force."

An hour after the announcement of truce in Cairo, Israeli Prime Minister Benjamin Netanyahu, along with his Defense Minister Ehud Barak and Foreign Minister Avigdor Lieberman, held a press brief to announce the end of Operation Pillar of Defense.

"At this time, the right thing for Israel to do is to reach a continuing cease-fire. As prime minister, it is demanded from me to take right steps for the state of Israel," Netanyahu said.

"We need to navigate this ship of a state in stormy waters with responsibility and wisdom, that's how a responsible government acts. We've executed a military action but also stayed open for a diplomatic solution," the Israeli prime minister said.

Netanyahu thanked US President Barack Obama for supporting Israel's right to defend itself and said that the two have agreed to work together in the region against terrorism.

"I agreed with Obama that we should give the Egyptian truce a chance and let Israeli citizens get back to their normal lives. We both agreed to work against weapons smuggling from Iran," Netanyahu added.

Netanyahu also thanked US Secretary of State Hillary Clinton for her efforts in the truce negotiations, as well as Egyptian officials for mediating the agreement.

After 09:00 pm on Wednesday evening, Islamic Hamas movement, which rules the Gaza Strip, announced that the cease-fire agreement has become valid in the Gaza Strip. As the truce came into effect at 09:00 p.m, the last Israeli airstrike and the last rocket fired by the Hamas armed wing both occurred at around 08:55 p.m. Gaza time.

Palestinian President Mahmoud Abbas on Wednesday night welcomed the cease-fire agreement. Abbas said in an official statement published by the official news agency Wafa that he supports the agreement "to stop the bloodshed of our people and to put an end to the continuation of the Israeli aggression on Gaza."

"The Palestinian (National) Authority believes that any forthcoming steps of the cease-fire won't harm the interests of our people and the geographic unity between the Gaza Strip and West Bank," the statement said.

Sayyed Hassan Nasrallah, head of Lebanese militant group Hezbollah, said in a televised speech on Wednesday night that the cease-fire was "an end to the Israeli aggression and a victory for the Palestinian resistance."

Thousands of Palestinians in the Gaza Strip took to the streets on Wednesday evening to celebrate the truce. With cars honking and guns firing celebratory shots into the air, the Gazans marched to Shiffa Hospital to visit the wounded.