Israel bombed southern Gaza's main city on Monday after Hamas warned no Israeli hostages would leave the territory alive unless its demands for prisoner releases were met.
Hamas triggered the conflict when the group carried out the deadliest-ever attack on Israel on October 7, killing 1,200 people, according to Israeli figures, and taking about 240 hostages back to Gaza.
Israel has responded with a military offensive that has reduced much of Gaza to rubble and killed at least 17,997 people, mostly women and children, according to the Hamas-run health ministry.
Israeli strikes on Monday hit the city of Khan Yunis, an AFP correspondent reported, while Palestinian militants Islamic Jihad said they had blown up a house where Israeli soldiers were searching for a tunnel shaft.
The army reported rocket fire from Gaza into Israel on Monday, and said fierce fighting had taken place on Sunday around Gaza City and Khan Yunis.
Hamas on Sunday warned that Israel would not receive "their prisoners alive without an exchange and negotiation and meeting the demands of the resistance".
Israel says there are still 137 hostages in Gaza, while activists say around 7,000 Palestinians are in Israeli jails.
Months of intense bombardment and clashes have left Gaza's health system on the brink of collapse, with most hospitals no longer functioning and nearly two million people displaced.
AFP visited the bombed-out ruins of the Al-Shifa hospital in Gaza City and found at least 30,000 people taking refuge amid the rubble after Israeli forces raided the medical facility last month.
"Our life has become a living hell, there's no electricity, no water, no flour, no bread, no medicine for the children who are all sick," said Mohammed Daloul, 38, who fled there with his wife and three children.
ARS