Israel has again attacked Gaza amid hints that its three-week-old offensive in the region could be entering its final stages.
A day after Israel attacked the UN facility in Gaza's main city, the military carried out some 40 air strikes - including an attack on a mosque which Israel claims was being used as a weapons store.
Israeli tanks also withdrew from the Gaza City neighbourhood of Tal al-Hawa this morning, where clashes the previous day levelled parts of the residential area and set a hospital ablaze.
Since the Israeli attacks began on 27 December, 1,133 Palestinians have been killed and another 5,130 wounded, according to Gaza medics.
Some 600 of the victims have been civilians - 355 were children.
10 Israeli soldiers and three civilians have been killed in the same period.
Israel says its offensive is intended to stop the rockets but Gaza militants have continued the fire and have now launched more than 750 rockets or mortar rounds during the assault.
This morning, Israeli spokesman Mark Regev suggested the assault in Gaza may be nearing an end.
'Hopefully we're in the final act when we are briefed by (Amos) Gilad and (Tzipi) Livni.
'There may be a full security cabinet meeting and decisions will stem from that.' Israeli officials said the security cabinet could meet either today or tomorrow.
Israel says it is working to secure foreign guarantees that arms smuggling to Hamas militants would end under any deal to call off its three-week-old offensive.
US Secretary of State Condoleezza Rice and Israeli Foreign Minister Tzipi Livni have signed a US-Israeli deal aimed at halting arms smuggling into Gaza, hoping to clinch a ceasefire.
Ms Rice said that the Memorandum of Understanding should be thought of as one of the elements of trying to help bring into being a durable ceasefire.
She said that one of a number of conditions that need to be obtained if a ceasefire is to be durable is to do something about the weapons smuggling.
Israeli Prime Minister Ehud Olmert dispatched Ms Livni to Washington on a last-minute mission to sign the agreement.
An Israeli official said the contents of the document were still being worked out by US and Israeli diplomats when asked for details.
He recalled the agreement was a key Israeli demand for a ceasefire but would not say how quickly a truce could be achieved.
Ms Rice said the deal was ‘a bilateral memorandum of understanding with Israel, but it's my understanding that Foreign Minister Livni is going to pursue similar efforts with our European colleagues.’
The top US diplomat also spoke by telephone with her counterparts in Britain, Germany and France, but was cautious when asked about when a ceasefire could be implemented in the fighting now in its 21st day.
At least 1,145 Palestinians have been killed and another 5,160 wounded in the Israeli onslaught, according to Gaza medics.
Israel launched its Operation Cast Lead on 27 December to stop Hamas militants, who control Gaza, from firing rockets on southern Israeli towns.
Analysts see a possible deadline for the offensive with the departure of the Bush administration, after which Israel may be reluctant to test the support of the new Obama leadership.
Shelled and besieged from air, ground and sea, Hamas yesterday offered a year-long, renewable truce under which Israel would withdraw its troops within a week and all Gaza's border crossings would open immediately.
Israel did not immediately address those terms, which were relayed through Egyptian mediators.
Despite outcry over the carnage and damage to media and UN aid facilities, Israel has vowed to fight on until the rocket salvoes stop and measures are imposed to stop Hamas bringing in arms via tunnels from Egypt.
Mr Olmert's office said US Secretary of State Condoleezza Rice told him the US would be prepared to assist in solving the issue of smuggling.
Israel Radio said the Olmert government would also send a defence envoy, Amos Gilad, to Egypt to discuss the Gaza border.
A senior Western diplomat said Israel appeared to be seeking last-minute gains on the ground before a truce could be imposed.
'It's a classic Israeli strategy,' the diplomat said.
Israel yesterday killed Hamas Interior Minister Saeed Seyyam with an air strike on a house in Jabalya refugee camp.
Mr Seyyam, who had overseen 13,000 Hamas police and security men, died along with his son, brother and half a dozen others.
'We've lost all our food': UNWRA
Israeli attacks also caused extensive damage to a hospital, a TV office, and a storage compound used by the UN Relief and Works Agency, which tends to the refugees who make up more than half of Gaza's 1.5m Palestinians.
'We've lost all our food and all our medicine to this fire. We need the shelling to stop,' an UNRWA worker said.
Mr Olmert apologised but said troops had been responding to shots from gunmen at the compound.
This was denied by UN officials in Gaza and UN Secretary General Ban Ki-moon.
About 25 rockets fired from Gaza hit southern Israel yesterday, wounding six people.
Hamas' Damascus-based leader Khaled Meshaal reiterated his group's demands: 'First, the aggression must stop; second, the Israeli forces must withdraw from Gaza...immediately, of course; thirdly, the siege must be lifted and fourth we want all crossing-points reopened, first of which is Rafah (Egypt).'
Hamas won a 2006 Palestinian election but was shunned by the West for its hostility to Israel. The Islamists took control of Gaza a year later after driving out the secular Fatah faction of Western-backed Palestinian President Mahmoud Abbas.
