Israeli bulldozers have demolished more than a dozen tunnels in the Gaza Strip, and Palestinian authorities reported intensified air strikes and shelling as the death toll from Israel's ground offensive rose to at least 342 Palestinians.
Israeli soldiers uncovered 34 shafts leading into about a dozen underground tunnels, some as deep as 30 yards, that could be used to carry out attacks, the military said.
Palestinian gunmen disguised in Israeli uniforms managed to infiltrate Israel from Gaza using another tunnel and killed two Israeli soldiers and injured several others, the military said. At least one Palestinian was killed in the clash.
Hamas said 12 of its fighters participated in the attack and that the group took some of the soldiers' weapons back to their hideouts.
In two other confrontations, Palestinian gunmen jumped out of tunnels and shot at soldiers who returned fire. Two of the gunmen were killed. Another militant died when the explosive vest he was wearing went off, the military said.
In one instance, the militants were found with tranquillisers and handcuffs, indicating they "intended to abduct Israelis", according to the military.
It was the second day that Palestinians used their network of underground tunnels to penetrate Israel in the current round of fighting. Israel embarked on its ground offensive in part to seek and destroy the tunnels on Thursday, the same day 13 heavily armed Palestinians sneaked through a tunnel from Gaza and emerged inside Israel near a southern community.
The militants were killed by an air strike after they came out of the tunnel.
Clashes persisted this evening, with heavy fighting reported in several parts of Gaza.
Footage released by the Israeli military showed tunnels being demolished by army excavators and other equipment on the ground and by air strikes from above.
Gaza Health Ministry spokesman Ashraf al-Kidra said the new round of air strikes raised the death toll from the 12-day offensive to at least 342 Palestinians, many of them civilians.
In Israel, a rocket from Gaza killed a man near the southern city of Dimona and wounded four people, police spokesman Micky Rosenfeld said, marking the second Israeli civilian casualty from the fighting. An Israeli soldier was killed after the start of the ground operation, probably from friendly fire.
Casualties could mount quickly if the military moves deeper into urban areas.
About 50,000 Palestinians are already staying in United Nations shelters, according to UNRWA, the UN refugee agency for Palestinians.
Early today, Israeli tank fire killed at least five members of the Al Zawaydi family at their home in Beit Lahiya, including two children. In a separate incident, tank shell fire killed three members of the Hamooda family in their home, among them two children.
In Gaza City, two boys and a 12-month-old infant neighbour were killed last night after the break of the Ramadan fast.
Israel says it is going to great lengths to avoid civilian casualties and blames them on Hamas, accusing it of firing from within residential neighbourhoods and using civilians as "human shields".
The military said it has hit more than 2,500 targets in Gaza, including 1,100 rocket launchers, during the 12 days of fighting. It said 70 militants were killed and another 13 taken to Israel for questioning.
Gaza militants have fired more than 1,760 rockets at Israeli cities since July 8, the military said.
The military said it had also received intelligence reports that Palestinians had strapped explosives to animals and intended to send them toward soldiers. A donkey laden with explosives approached soldiers later on and blew up, causing no injuries, it said.
Israel's ground attack came after it became increasingly exasperated with rocket fire from Gaza, especially after Hamas rejected an Egyptian ceasefire plan earlier in the week.
Egyptian foreign minister Sameh Shukri today repeated a call for the two sides to adopt the ceasefire, saying it is the only offer on the table, despite efforts from Hamas backers Turkey and Qatar to broker a deal.