Israel is warning residents of the Gaza Strip that it is planning to step up its military offensive. Israeli planes dropped thousands of leaflets proclaiming an imminent escalation of military operations.
Observers say phase three could see Israeli forces moving deeper into cities and refugee camps.
Dozens more Hamas targets, including rocket launching sites, weapons stores and smugglilng tunnels have been attacked, Israel says.
Many Palestinian families have resorted to taking shelter in and around hospitals in an effort to seek sanctuary from the continuing offensive.
Medical staff in Gaza say 235 children have died during the two-week long action.
Meanwhile, Hamas militants have continued to fire rockets at the southern Israeli city of Ashkelon, lightly wounding four people.
Two Israeli soldiers injured in fighting in Gaza have also been taken to hospital in Ashkelon.
And, in what appears to have been the bloodiest incident on Saturday Palestinian medical staff claimed eight civilians were killed by Israeli fire in Jabaliya, a claim later denied by Israeli army officials.
Israel said it had launched more than 70 attacks on Hamas targets by air, land and sea, hitting what it called “armed terror operatives in different incidents”.
The Israeli army also said the commander of the Hamas rocket launching squads, Amir Mansi, was among those killed.