10000 Israeli troops battled Hamas fighters in Gaza early on Monday amid tank, artillery and air strikes, as the death toll from the offensive to end rocket attacks passed 510.
Israeli forces moved into the fringes of Gaza City as families fled or hid on the second night of combat.
Orange streaks flashed across the darkened sky from tank shells and warplane missiles while Hamas heavy machine guns took speculative shots at Israeli jets above the enclave of 1.5 million people.
Israeli infantry and Islamist militia fought in the Zeitoun suburb of Gaza City. The streets of the territory’s main city were mostly blacked out because of power cuts and only a few Hamas fighters ventured out, residents informed.
For most of the population it was another night of looking for any place that might be able to resist a shell.
"Our life is filled with fear," said by a resident of the surrounded city. "We call on the world to have mercy on us and save us from the Israeli war. What did the children do wrong to have their houses bombed?"
The Israeli government fought off intense international pressure over its biggest military operation since its 2006 war in Lebanon, with French President Nicolas Sarkozy due in the region, as well as Russian and EU delegations.
At least 70 Palestinians have been killed since the ground offensive began on Saturday night, Gaza medics said.
Israel said one soldier was killed by a mortar shell and another 19 were wounded, bringing the total to 49 since the beginning of the incursion.
Columns of troops and tanks surrounded Gaza City and fighting was reported in outer districts.
Witnesses said tanks had cut off Gaza City and the far north from the rest of the strip, which would prevent the entry of arms, supplies and fighters from the south.
An AFP photographer said warplanes were also bombing targets in the southern border town of Rafah, where hundreds of tunnels are used to smuggle in supplies from Egypt.
The army declined to confirm or deny the reports.
Fierce clashes were also reported around the northern towns of Beit Lahiya, Beit Hanun and Jabaliya.
Moawiya Hassanein, head of Gaza medical emergency services, told AFP the number of Palestinians killed since the Israeli operation was launched on December 27 was now 512, including 87 children.
Five members of the same family died when a tank shell hit their car near Gaza City, emergency services said.
Three ambulance workers were killed when they were hit by a missile as they helped wounded victims of the conflict, medics said.
Aid groups said the offensive had aggravated a humanitarian crisis among the population, who have no electricity, no water and now face dire food shortages. Hospitals were only running on backup generators power.
International efforts to halt the conflict sought new impetus after the UN Security Council failed to agree a statement on the conflict, with the United States giving strong backing to Israel.
Sarkozy was scheduled to meet Israeli Prime Minister Ehud Olmert in Jerusalem and Palestinian president Mahmud Abbas in Ramallah on Monday, after first meeting his Egyptian counterpart, Hosni Mubarak, in Cairo.
France hopes Egypt can rekindle its role as a mediator between Israel and Hamas.