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At least 50 people were killed, including a Hamas leader, while hundreds were wounded after Israeli air strikes flattened 20 houses in Gaza's Jabalia refugee camp.
Israel sent its forces into the besieged enclave last week after about a month of air bombardments in retaliation for an attack by Hamas.
The Israeli army said the strikes on Jabalia, Gaza's largest refugee camp, had killed Ibrahim Biari, a Hamas commander.
“[Biari] was very important, I would say even pivotal in the planning and the execution of the October 7 attack against Israel from the north-eastern parts of the Gaza Strip,” said Lt Col Jonathan Conricus.
Dozens of Hamas combatants were in the same underground tunnel complex as Biari and were also killed when it collapsed in the attack, Lt Col Conricus said.
“And I understand that is also the reason why there are many reports of collateral damage and non-combatant casualties. We're looking into those as well,” he said.
Hamas spokesman Hazem Qassem denied that any senior commander was present in the tunnels and called the claim an Israeli pretext for killing civilians.
Meanwhile, hospitals were overwhelmed with victims, Palestinian state news agency Wafa and Gaza's Health Ministry reported on Tuesday.
“Hundreds of victims, including martyrs and wounded, have arrived at the Indonesian Hospital in the northern Gaza Strip following the occupation's targeting of citizens' homes in Jabalia camp,” the ministry said.
Dr Atef Kahlout, head of the Indonesian Hospital, told The National that about 400 people had been killed or wounded in the air strikes.
The hospital, which can accommodate 257 patients, is about 2km from the location of the attack, he said.
“We are having to treat victims on the floors [as] we have nowhere to put them. People are coming in with fourth-degree burns, some bodies headless and in pieces,” said Dr Kahlout said.
“What else can you expect from air strikes that hit buildings made up of four to six floors?”
Israel and Hamas fighters engage in 'fierce battle' in Gaza
Arab countries condemned the strike, with the UAE saying it could result in irreparable ramifications in the region. Saudi Arabia called the attacks “inhumane”.
Hours before the strike, Israel launched a long-feared ground offensive in Gaza's northern Al Karama district and along Salah Al Din Street, Ministry of Interior spokesman Iyad Al Bazm said.
Ground forces are attempting to reach Al Rashid Street in an attempt to “separate Gaza's north and south”, he added.
The Ezzedine Al Qassam Brigades, a Hamas unit, said it attacked Israeli troops entering a building in Beit Hanoun, in Gaza’s north-east.
The Israeli army has confirmed that its troops have been fighting “deep in the Gaza Strip” in recent hours.
Also on Tuesday, Yemen's Houthi rebels said they had fired missiles and drones towards Israel in retaliation for the Gaza war, signalling a new front in the conflict with the Iran-backed militia.
“Our armed forces launched a large batch of ballistic and winged missiles and a large number of drones at various targets of the Israeli enemy,” said the heavily armed group.
On Wednesday, Palestine Telecommunications Company, or Paltel, said in a post on social media platform X, formerly Twitter, that communications and internet services had been completely cut off in Gaza after international access was disconnected again.
Paltel is Gaza's largest telecoms provider.
Two killed in occupied West Bank
The Israeli military killed two Palestinians, a teenager and a 70-year-old, during a raid in the occupied West Bank on Tuesday, the Palestinian Health Ministry said.
Rawhi Rashid Sawafta, 70, died after being “shot in the face” in the city of Tubas, in the northern part of the West Bank, the Palestinian ministry said.
Nine Palestinians were wounded, two seriously, in clashes with Israeli forces during the raid, the ministry said.
Israeli forces in civilian clothing had surrounded a house in Tubas before being joined by army reinforcements, Wafa reported.
