The Israeli army is moving deeper into densely populated areas of Gaza on the 17th day of its offensive against Hamas.
It has also deployed reserve units for the first time since the start of the operation, in a sign it could be stepping up its ground offensive.
Fierce battle was reported between Israeli soldiers and Hamas militants, according to residents and local journalists. Hardly any foreign journalists are allowed into the Strip.
The deathtoll after more than two weeks of fighting is estimated to have reached 900 among Palestinians, and 13 among Israelis.
Israel has drawn international criticism over the Palestinian casualties.
Egypt has been trying to broker a ceasefire. But Israel first wants an end to rocket attacks on its territory and the supply of weapons to Hamas, while Hamas has said there will be no truce until Israel ends its offensive and its blockade on Gaza.