The PM and parliament speaker were hurt and an imam and three guards killed.
Earlier troops shelled the home of the brother of the tribal leader whose supporters they are fighting.
However, the office of the tribal leader, Sheikh Sadeq al-Ahmar, denied responsibility for the attack on the palace. This contradicted an earlier claim made by Sheikh Ahmar's spokesman that the attack had been retaliatory.
Thousands meanwhile attended a funeral for 50 people killed in the violence.
The United States has sent an envoy to the Gulf to discuss ways of stopping the violence, which has brought Yemen to the brink of civil war.
More than 350 people have been killed since the uprising started in January, but least 135 of them have died in the past 10 days.
This is the first attack on the presidential palace since the clashes started.
His forces were intending to crush Hamid al-Ahmar's forces. They have moved the fight from the north of the city in Hassaba to the south in Hadda, a residential upper-class area occupied by diplomats, top officials and businessmen. Sheikh Ahmar's house is there and has been heavily targeted.
But the president's army is not as powerful as it was. Its first division, led by Gen Ali Mohsen, has defected to the opposition and has not been involved in the fighting yet. But if it did become involved, it would mean a declaration of war.
The retaliation against President Saleh's compound could expand into further clashes in the capital. It is also being seen as a sign that the end is near for him.
His forces were intending to crush Hamid al-Ahmar's forces. They have moved the fight from the north of the city in Hassaba to the south in Hadda, a residential upper-class area occupied by diplomats, top officials and businessmen. Sheikh Ahmar's house is there and has been heavily targeted.
But the president's army is not as powerful as it was. Its first division, led by Gen Ali Mohsen, has defected to the opposition and has not been involved in the fighting yet. But if it did become involved, it would mean a declaration of war.
The retaliation against President Saleh's compound could expand into further clashes in the capital. It is also being seen as a sign that the end is near for him.
Western and regional powers have been urging Mr Saleh to sign a Gulf Co-operation Council-brokered deal that would see him hand over to his deputy in return for an amnesty from prosecution.
He has agreed to sign on several occasions, but then backed out.GCC Secretary-General Abdulattif al-Zayani called for an end to the fighting and said the council was ready to do all it could to help, Reuters news agency reported.
'Red lines' There has been heavy fighting in the northern Sanaa district of Hassaba since last week between Mr Saleh's forces and tribesman loyal to Sheikh Sadiq al-Ahmar, the head of the powerful Hashid tribal confederation.
Explosions were heard in the south of the capital for the first time. Witnesses said the army had shelled the home of Sheikh Hamid al-Ahmar, a leader of the opposition Islah party, in the Hadda district.
Later, a spokesman for the ruling General People's Congress party said at least two shells had hit a mosque in the presidential palace compound.
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"The Ahmar [tribe] have crossed all the red lines," he added.
Yemen's Ahmar family
- Sheikh Sadeq al-Ahmar is the overall leader of the Hashid tribal confederation, one of the two main tribal groupings in Yemen
- His father Abdullah Bin Hussein al-Ahmar - who died in 2007 - founded the Islamist Islah opposition party
- Sheikh Sadeq's brother Hamid al-Ahmar is a prominent businessman and leading member of Islah. He has repeatedly called for Mr Saleh's resignation
- Another brother, Sheikh Hussein Bin Abdullah al-Ahmar, resigned from President Saleh's Governing People's Council on 28 February over the shootings of protesters Al-Arabiya TV reported that Mr Rai was in a critical condition.
Earlier, troops set fire to the headquarters of Suhail TV, while state TV showed pictures of the burning offices of national airline Yemenia, blaming it on the tribesmen.
The defence ministry said special forces personnel led by Mr Saleh's son, Ahmed, had been deployed for the first time.
It said they would help "liberate" more than a dozen ministries and other government buildings occupied by the tribesmen.
Tribal sources meanwhile said several thousand tribesmen were heading to the capital from surrounding areas to join the fighting.
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