Dozens of people are reported to have been killed by a huge explosion at Jabalia refugee camp in northern Gaza.
Gaza's Hamas-run health ministry said at least 50 people were killed and 150 wounded by an Israeli air strike, which it denounced as a "horrific massacre".
Pictures showed people climbing through several large craters and searching for survivors inside wrecked buildings.
There was no immediate comment from the Israeli military, which has been bombarding Gaza for three weeks.
Earlier, the military said its ground forces were engaged in "fierce battles" with Hamas fighters deep inside the Gaza Strip and had killed dozens of them when it attacked an outpost in the north.
Hamas said its fighters had been using anti-tank missiles and machine-guns against the advancing troops.
Israel has said it is the "second phase" of its war to eliminate Hamas, which began after an unprecedented cross-border attack by gunmen from Gaza on 7 October in which 1,400 people were killed and another 240 taken hostage.
Gaza's health ministry says more than 8,500 people have been killed in the territory since then, while supplies of food, water, fuel and medicine for its 2.2 million residents are dangerously low because of a siege imposed by Israel.