In what appeared to be the biggest ground assault in Gaza since a truce with Hamas unravelled last week, Israel said its troops - who were backed by warplanes - had reached the heart of Khan Younis on Tuesday and were also surrounding the city.
"We are in the most intense day since the beginning of the ground operation," the commander of the Israeli military's Southern Command, General Yaron Finkelman, said in a statement.
He said Israeli forces were also fighting in Jabalia, a large urban refugee camp and Hamas hotbed in northern Gaza next to Gaza City, and in Shuja'iyya, east of the city.
"We are in the heart of Jabalia, in the heart of Shuja'iyya, and now also in the heart of Khan Younis," he said.
Israeli armoured vehicles and tanks have surrounded the city of Khan Younis in the Gaza Strip. (AP PHOTO)
Hamas' armed wing, the al Qassam Brigades, said its fighters had destroyed or damaged 24 Israeli military vehicles and snipers had killed or wounded eight Israeli soldiers in ongoing clashes in various areas of Khan Younis.
Separately, Gaza health officials said many people were killed in an Israeli strike on houses in Deir al-Balah, north of Khan Younis. Dr Eyad Al-Jabri, head of the Shuhada Al-Aqsa Hospital there, told Reuters at least 45 were killed. Reuters could not reach the area or confirm the toll.
The Israelis, who largely seized Gaza's northern half last month before pausing for the week-long truce, believe Hamas commanders they aim to eliminate are holed up in part of a vast underground tunnel network in the territory.
Israel unleashed its campaign in retribution for an attack on October 7 by Hamas fighters who rampaged through Israeli towns, killing 1200 people and seizing 240 hostages, according to Israel's tally.
Palestinians had been trying to flee east Khan Younis before Israel issued a warning to stay inside. (AP PHOTO)
Hamas' media office on Tuesday said at least 16,248 people including 7112 children and 4885 women had been killed in Gaza by Israeli military action since October 7. Thousands more are missing and feared buried under rubble.
It was not immediately possible to verify the media office's figures with the Gaza health ministry.
Hamas on Tuesday said there would no more negotiations or exchange of detainees until Israeli "aggression" against Gaza stopped. More than 100 of the 240 hostages Hamas took in its October incursion were freed during the seven-day truce.
The United States on Tuesday again pressed Israel, its close ally, to uphold international humanitarian law and do more to reduce harm to civilians in the war's next phase. Despite the mounting death toll, it said Israel was now showing some receptiveness to the calls.
Israel says the blame for civilian casualties largely falls on Hamas fighters for operating in residential areas, including from underground tunnels that can be destroyed only with huge bombs. Hamas denies using human shields.
Israeli bombardments have driven 80 per cent of Gaza's 2.3 million residents from their homes, most fleeing south. Crowded southern areas are now sheltering triple their usual population.
Injured Gazans lie on the dirty floors of inundated hospitals awaiting medical treatment. (EPA PHOTO)
At Khan Younis' main Nasser hospital, the wounded arrived after what survivors described as a strike on a school being used as a shelter for the displaced.
Since the truce collapsed, Israel has been posting an online map to tell Gazans which parts of the enclave to evacuate. Khan Younis' eastern quarter was marked on Monday, home to hundreds of thousands of people, many of whom took flight on foot.
Gazans say there is no safe place, with remaining towns and shelters already overwhelmed, and Israel continuing to bomb the areas where it is telling people to go.