Israeli troops and Palestinian fighters are fighting further fierce battles on the streets of Gaza City.
Israeli special forces backed by tanks and air strikes moved deeper into Gaza's main city overnight, advancing several hundred metres into several neighbourhoods in the south.
Palestinian militants fought back with roadside bombs and mortar and gunfire. Witnesses said the fighting was the most intense of the 18-day-old conflict.
The clashes came as the Israeli media widely speculated that the country's leadership may approve an expansion of offensive in Gaza, despite ongoing talks in Egypt on how to end the fighting.
UN Secretary-General Ban Ki-moon, who is to travel to the Middle East today, has again called on the two sides to stop the violence.
Israeli tanks retreated shortly after dawn from the neighbourhoods of Tal al-Hawa and Sheikh Ajlin, but troops and armour remain camped in the outlying neighbourhood of Zeitun.
Dozens of houses have been damaged and some reduced to rubble by Israeli armour in the hours following the clashes.
At least 10 people were killed this morning's violence, medics said, while the army reported that one Israeli officer was critically wounded.
In a late-night television address, Ismail Haniya, who heads the Hamas administration in Gaza, proclaimed Israel had failed to break the will of Gaza and that the Islamists were nearing victory.
Israeli air craft pounded the densely-populated region with more than 60 air strikes overnight, targeting what Israel described as rocket launching site and weapons storage facilities.
Aid agencies have again warned of a growing humanitarian crisis in the territory where the vast majority of the 1.5 million population depends on foreign aid.
Since Israel began its operation 27 December, at least 940 people, including 280 children, have been killed and another 4,350 wounded, according to Gaza medics.
Ten Israeli soldiers and three civilians have been killed in combat or by rocket attacks in the same period and militants have fired some 700 rockets and mortars into Israel.
