In Gaza City in the north of the embattled enclave, 20 Palestinians were killed and 150 injured when were hit by an Israeli strike while queuing to collect food aid, said Ashraf al-Qidra, spokesperson for Gaza's Hamas-run health ministry. The Israeli military said it was looking into the report.

Gaza health officials said at least 50 Palestinians had been killed in the past 24 hours in Khan Younis, where Israel has shifted full-blown military operations after starting to pull forces out of northern areas it says it now largely controls.

Most of the Gaza Strip's 2.3 million population is now squeezed into Khan Younis and towns just north and south of it, after being driven out of its northern half earlier in Israel's military campaign, now in its fourth month.

Khan Younis is encircled by Israeli armoured forces and under almost non-stop aerial and ground fire, residents said, and a huge mushroom-like column of smoke billowed skyward from areas of Israeli military operations on Thursday.

Palestinian medics said Israeli tanks had cut off and were shelling targets around the city's two main still-functioning hospitals, Nasser and Al-Amal, trapping medical teams, patients and displaced people huddled inside or nearby.

Israel says Hamas militants use hospital premises as cover for bases, something the Islamist group and medical staff deny.

The Israeli army's siege of Khan Younis' main hospitals, in what it calls an escalating campaign to eliminate militants in Hamas' main south Gaza bastion, has made it near impossible for rescue crews to reach the wounded or collect the dead.

Al-Qidra said Nasser Hospital was running at only 10% of capacity in "harsh and frightening conditions", having run out of food, pain killers and anaesthetics.

On Wednesday, the United Nations said Israeli tanks struck a large U.N. compound in Gaza sheltering displaced Palestinians, killing at least nine people and wounding 75. But Israel denied its forces were responsible, suggesting Hamas might have launched the shelling. It said it was reviewing the incident.

Israel said Hamas had "command and control centres" in the vicinity, which it described as "a dense area" with civilians and several hospitals where it said militants were active.

On Thursday, tens of thousands of homeless people sheltering in the compound prepared to flee to Rafah, 15 km (nine miles) away on Gaza's southern edge, after Israeli tank forces nearby ordered all civilians inside to leave, U.N. officials said.

Israeli forces had set a 5 p.m. local time (1500 GMT) Friday deadline for the compound to be emptied, said Juliette Touma, spokesperson for the U.N. Palestinian refugee agency. Over 30,000 people were packed inside the compound, she estimated.

There was no immediate comment from the Israeli military.

'THE SITUATION IS VERY DIFFICULT'

"The U.N. shelter is overcrowded, overflowing with garbage, shooting and shell fire continues outside. People here are afraid, the situation is very difficult," local journalist Alaa Al-Mashharawi said in a video of the scene posted on Facebook.

The International Committee of the Red Cross said less than 20% of the narrow enclave - around 60 square km (23 sq miles) - now harboured over 1.5 million homeless people in the south, where the escalation of fighting "threatens their survival".

At least 25,700 people have been killed by Israeli strikes in Gaza, one of the world's most densely populated places, Palestinian health officials say, with large tracts of the heavily built-up enclave flattened by bombing.

Israel unleashed its war to eradicate Hamas after militants stormed through the border fence in a shock incursion into nearby Israeli towns and bases on Oct. 7, killing 1,200 people and seizing around 240 hostages.

The Israeli military has said it has killed more than 9,000 Gaza militants and lost 220 soldiers in the 3-1/2-month-old war. Hamas has dismissed Israel's figures on militant deaths.

In its latest update, the Israeli military said forces in Khan Younis were fighting militants at close quarters and were using precision air strikes and snipers to take out multiple Hamas targets, including in the Al-Amal district.

'HUMANITARIAN PAUSE' TALKS SNAGGED

Urgent international appeals for a ceasefire to spare civilians who have borne the brunt of casualties have fallen on deaf ears with Israel vowing not to relent until Hamas has been eradicated and all hostages freed.

Hamas says any deal must hinge on Israel ending its offensive and siege and withdrawing from the Gaza Strip.

Mediated talks on a month-long truce that could see hostages freed in swaps for Palestinian prisoners in Israel have resumed, but have snagged on the two sides' differences over how to bring an end to the war, sources told Reuters.

A source regularly briefed on the talks said there had been no disruption, even after key mediator Qatar rebuked Israeli Prime Minister Benjamin Netanyahu on Wednesday for having allegedly called the Gulf Arab state "problematic" in a leaked recording.

Gaza's conflict threatens to destabilise the Middle East, stoking hostilities ranging from the Israeli-occupied West Bank to the Israel-Lebanon border region, Syria, Iraq and Red Sea shipping lanes crucial to international trade.

In the West Bank, the Palestinian health ministry that exercises limited self-rule there said on Thursday at least 370 people had been killed in the course of Israeli army raids or clashes with Palestinian militants since Oct. 7.