Israeli forces split Gaza in two
Fighting is raging into the night in the Gaza Strip, where Israeli ground forces and heavy armour have effectively cut the territory in two.
Supported by a naval, air and land bombardment, they have taken up positions on either side of Gaza City and along a major east-west road.
About 40 tanks were moving towards Khan Younis in the south, reports say.
Palestinian officials say 70 people have been killed in the ground assault. One Israeli soldier has been killed.
Earlier, US Vice-President Dick Cheney defended the Israeli ground offensive, saying air attacks were not enough to destroy rocket sites. He also said Israel had not sought US approval launching it.
Israeli President Shimon Peres rejected calls for a ceasefire, but said his country did not intend to re-occupy Gaza or crush Hamas.
The Palestinian Authority President, Mahmoud Abbas, said he was doing all he could to stop Israel's "vicious aggression".
An EU mission has flown to the region. The bloc's foreign policy chief, Javier Solana, said the crisis represented a failure of diplomacy.
At least 32 missiles were fired into southern Israel from Gaza on Sunday. Two people were lightly wounded in the Eshkol region, while one woman was slightly injured in Sderot.
'Face-to-face battles'
As night fell, blackouts plunged much of Gaza into darkness. However, the flashes of explosions could be seen from the northern border, and the regular sounds of gun and artillery fire heard.
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During the day, the fighting appeared to move away from the northern end of the territory, towards more populous areas in the west, correspondents say.
Later, Israeli military sources and witnesses said Israeli tanks and heavy armour had taken up positions on either side of Gaza City, in effect cutting Gaza into two parts, from the Karni crossing to the Mediterranean Sea.
The town of Beit Hanoun was also reportedly surrounded.
Hamas officials and witnesses report major fighting in five areas: east of the Jabaliya refugee camp; in the Zeitoun area; near the site of the former Jewish settlement of Netzarim; in the centre of Gaza; and on the outskirts of Khan Younis.
Hamas said its fighters were in some cases engaged in "face-to-face battles" with Israeli soldiers.
Earlier, the Israeli military said the militants were not engaging its troops in close combat but using mortars and improvised bombs.
The Palestinian health ministry says 509 Palestinians, mostly civilians, have been killed since the Israelis began their assault on Gaza eight days ago.
It says 21 of the 70 people killed since the beginning of the ground offensive were children. Some 2,500 people have reportedly also been wounded.
The figures could not be independently verified. Israel is refusing to let international journalists into Gaza despite a ruling by its a supreme court to admit a limited number of reporters.
Hamas officials say that 10 of its fighters have so far been killed.
The Israeli military says one of its soldiers has been killed and 34 wounded in the ground offensive, three of them seriously. It believes about 80% of the Palestinians killed were Hamas members.
'Trickle of aid'
The BBC's Rushdi Abu Alouf in Gaza City says the fighting and Israeli positions have stopped desperately needed medical supplies getting through to hospitals that are struggling to cope with the casualties.
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The aid agency Oxfam said a paramedic working for a partner organisation had been killed and two others injured by an Israeli shell.
Oxfam said it had been forced to suspend its work, apart from emergency medical aid, because the "trickle of humanitarian aid that Israel has sometimes allowed in" had dried up since the start of the ground offensive.
The Israeli government says 400 truckloads of humanitarian aid has been allowed into Gaza since the operation began.
Many agencies say deliveries have been insufficient, and that it is difficult to get supplies to where they are most needed.
The main aid crossing point at Rafah has also been closed while Israel troops attempt to destroy tunnels under the border with Egypt.
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