At least 19 Palestinians were killed in the latest fighting as trucks and cars packed with families fled from Gaza City and other towns in the face of the biggest Israeli military operation since its 2006 war in Lebanon.
International efforts to halt the conflict floundered. The UN Security Council failed even to agree on the wording of a statement on the conflict, with the United States giving strong backing to Israel.
Israeli infantry and tanks were just south of Gaza City. Heavy fighting was also reported njust to the north and around the northern towns of Beit Lahiya, Beit Hanun and Jabaliya.
Explosions shook the north of the Hamas-controlled enclave, home to 1.5 million people, and thick smoke hung over much of the Gaza Strip as the Israeli army took control of main roads.
There were constant explosions and the sound of automatic gunfire, residents said.
At least 19 people have been killed since Israel launched its night-time offensive on Saturday after eight days of air strikes in which at least 485 Palestinians died and more than 2,400 were wounded, Gaza medics said.
More than 80 children are among the dead.
Some 30 Israeli soldiers and "several" Hamas fighters were reported to have been wounded since the ground offensive began, the army and medics said.
Israel has denied Hamas claims that soldiers had been killed. The Qatar-based Al-Jazeera news channel reported that one Israeli had been killed.
A Hamas spokesman, speaking as troops crossed the border, said that Gaza will become "a cemetery" for Israeli troops.
Witnesses said Israeli infantry and tanks had taken control of the Salaheddine Road, the main highway along the length of the enclave.
Advancing troops exchanged fire with Hamas fighters, who shot mortar rounds and detonated roadside bombs, they said, adding that Israeli forces were also seen detaining people.
In Tel Aviv Defence Minister Ehud Barak warned before a cabinet meeting that the operation would not be "simple."
"The operation will be expanded and intensified as much as necessary," he said. "War is not a picnic."
Prime Minister Ehud Olmert said Israel would not open a new front in the north, in a veiled reference to tensions with the Hezbollah militia in Lebanon.
Olmert said he had told the army to be "extremely alert and prepared for any development in the event that someone might think that this is his opportunity to take advantage" of the conflict in Gaza.
Israel unleashed "Operation Cast Lead" on December 27 with the declared aim of ending rocket attacks into Israel from Gaza that resumed after a six-month truce ended.
Rocket fire from Gaza over the past week has killed four people in Israel. Twenty-five rockets and mortar rounds were fired across the border on Sunday and hit the towns of Sderot and Ashdod, although no casualties were reported.
Israel's offensive has sparked spiralling anger in the Muslim world and protests across the globe.
The UN Security Council failed to agree a statement calling for a ceasefire despite nearly four hours of closed-door consultations late on Saturday.
Hamas spokesman Fawzi Barhum said that "what is happening in the Security Council is a farce that shows the level that America and the Zionist occupier dominates its decisions."
The deputy US ambassador to the United Nations, Alejandro Wolff, said afterwards Washington believed it was crucial "not to return to the status quo" that had allowed Hamas to attack Israel.
"The efforts we are making internationally are designed to establish a sustainable, durable ceasefire that's respected by all," he said. "And that means no more rocket attacks. It means no more smuggling of arms."
France led international criticism of the ground invasion that Palestinian president Mahmud Abbas warned would have "grave consequences" for the region.
French President Nicolas Sarkozy was to hold talks on Monday with Olmert in Jerusalem and Abbas in Ramallah.
French Foreign Minister Bernard Kouchner called the ground offensive a "dangerous military escalation" that would undermine truce efforts.
"France condemns the Israeli ground offensive against Gaza just as it condemns the continuing firing of rockets," he said.
Turkey, one of Israel's few Muslim allies, also condemned the air and ground offensive and called for it to end immediately.
British Prime Minister Gordon Brown said the ground offensive had created a "very dangerous moment" in the conflict.
"I think everybody around the world is expressing grave concerns. What we've got to do almost immediately is to work harder than we've done for an immediate ceasefire," he told BBC.
Israel has called a snap general election for February 10, and the current leadership has widespread public support for the offensive.
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