Hani al-Asi, a fisherman since the age of 11 and a father with 12 mouths to feed, had just begun throwing his lines into the Mediterranean when an Israeli gunboat sped towards his traditional hasaka.

With a machine gun mounted at the rear and half a dozen armed soldiers on the bridge, the navy vessel repeatedly circled the small fishing boat. The rolling waves caused by the backwash threatened to swamp it.

Asi had stopped his boat over an artificial reef created by dumped cars to attract the dwindling fish population. He was just beyond the limit of three nautical miles from the Gaza shoreline set by the Israeli military for Palestinian fishermen, beyond which they are forbidden to fish for "security reasons".

"We see them every day," he said, shrugging at the gunboat's presence. "I got used to this. Every day they are around us - shooting, damaging the boat, sometimes people are injured. If we were scared, we wouldn't fish. But we have nothing else to do."

With the boat rocking forcefully, the gunboat's crew addressed Asi in Arabic through its loudspeaker. "You are in a forbidden area. Go back." Asi pulled in the lines and headed back to port.

"The best place to fish is more than 10 miles out," he said. "But every time we exceed three miles, they shoot at us, use the water [cannon], take the nets. Even today when foreigners are with us, they were trying to tip the boat over."

Under the 1993 Oslo accords, Palestinian fishermen were permitted to fish up to 20 nautical miles off the coast of Gaza. Over the past 18 years, the fishing area has been successively eroded, most recently in 2007 when Israel imposed a limit of three nautical miles as part of its land and sea blockade of Gaza after Hamas took control of the territory.

But fishermen and human rights groups say that, since the war in Gaza in 2008-09, the Israeli military regularly enforces a limit even closer to the shore.

The restriction has devastated Gaza's fishing industry. "It is a catastrophic situation," said Khalil Shaheen of the Palestinian Centre for Human Rights. "Sixty thousand people are dependent on [the fishing industry], and 85% of daily income has been lost."

Fishermen on both sides of the three-mile limit, he said, were subjected to harassment, live fire, confiscation of boats and nets, and water cannon, sometimes impregnated with foul-smelling chemicals.

Since early June, a coalition of Palestinian and international organisations under the umbrella of Civil Peace Service Gaza has been monitoring encounters between fishermen and the Israeli military from its own boat, the Oliva.

But in the past fortnight, the Oliva itself has become a target for the Israeli navy, with repeated assaults on it by military vessels. Last Wednesday, the Guardian hired a boat to accompany the monitors plus a handful of hasakas out to sea.

At around the three-mile limit, the small flotilla was approached and repeatedly circled by two Israeli gunboats. The engines of the hasakas were cut as the waves caused by the gunboats' backwash rose and fell. After about 20 minutes, the gunboats withdrew as a third military vessel, deploying water cannon, arrived.

A powerful jet of water was targeted at the Oliva, causing the boat to rock dangerously and drenching those aboard. After repeated dousings, the Oliva's captain ordered the four passengers to clamber on to an adjacent hasaka, fearing his boat was about to sink. As the Oliva's engine was hit by the military vessel, he too was forced to abandon ship.

From a distance it seemed impossible that the Oliva would not go under. But its captain and other fishermen managed to secure a rope to try to tow it back to port. The military boat followed the Oliva and the other boats at some speed, still firing its water cannon, for several minutes.

According to Salah Ammar, the Oliva's captain, the boats were within the three-mile limit. "We don't even reach two miles before they chase us with guns and water [cannon]," he said.

However, GPS co-ordinates taken by the Guardian during Wednesday's encounter showed the position of the boats to be outside the permitted zone.

In a statement, the Israeli Defence Force said: "The ongoing hostilities between Israel and Palestinian terror organisations create significant security risks along the coast of the Gaza Strip. Due to these risks, fishing along the coasts has been restricted to a distance of three nautical miles from shore. Fishermen in Gaza are aware of these restrictions as they have been notified of them on numerous occasions. The restrictions and their enforcement by the Israel navy are in complete accordance with international law."

The United Nations and human rights organisations say the fishing restriction is collective punishment in violation of international law.

Shaheen rejects Israel's justification. "The Israeli navy has never found evidence that fishermen involved in violations have been involved weapons smuggling," he said. The "environment of daily harassment" was part of Israel's "illegal collective punishment and closure of Gaza".

The Oliva's engine was damaged in Wednesday's encounter but Ammar was planning to go out to sea again the next day if he could locate the parts he needed to fix it. "Every time I know what will happen. They will shoot water on me, fire bullets. But I get hundreds of calls asking, 'When will you go out?'" The fishermen, he says, want the protection they believe is afforded by the presence of international monitors on board the boat.

Asi, back at the port after his aborted fishing trip, was puzzled by the military's aggression towards fisherman whose faces, he says, the soldiers must recognise after repeated encounters. "The point is not security for the Israelis. They know everything. They arrested many of us and searched many boats and never found anything."

His morning's haul consisted of one large sea bass, sold for 150 shekels, and three smaller, worthless fish. After deducting 50 shekels for fuel, 50 shekels for bait, and 10 shekels to put aside for his boat's maintenance, he and his assistant pocketed 20 shekels (£3.60) each for their day's work.

Would he be going out again the next day? "Inshallah [if God wills it]. This is the only source I have to feed my family."