Israel intensified its land offensive in Gaza with artillery, tanks and gunboats and warned it could broaden an action Palestinians said was killing civilians.

Palestinian health officials said 27 Palestinians, including a baby, two children and a 70-year-old woman, had been killed since Israel sent ground forces into the densely populated strip of 1.8 million Palestinians on Thursday.

The Israeli military said it killed 17 Palestinian gunmen while another 13 surrendered and were taken for questioning after the infantry and tank assault began in the Islamist Hamas-dominated territory.

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One Israeli soldier was killed and several others wounded in the operations, in which some 150 targets, including 21 concealed rocket launchers and four tunnels, have been attacked, according to the military. The land advance followed 10 days of barrages against Gaza from air and sea, hundreds of rockets fired by Hamas into Israel and failed Egyptian attempts to secure a ceasefire.

Rocket salvoes, many of them intercepted by the Iron Dome anti-missile shield system, continued yesterday against southern Israel, police said, causing no casualties.

"We chose to start this operation after we exhausted other options and reached the conclusion that without it we could pay a much higher price," Israeli Prime Minister Benjamin Netanyahu said before a special cabinet session at Tel Aviv military headquarters.

"The main goal is to restore quiet. My instructions to the army, with the approval of the security cabinet, is to prepare for the possibility of a significant widening of the ground operation."

He did not say what form a broadened offensive might take. Israel says its forces have focused on seeking out tunnels Palestinian militants might use for cross-border raids. One such infiltration was narrowly thwarted on Thursday, with the Israeli army saying it had repelled 13 Hamas gunmen after they emerged from a tunnel close to an Israeli farming community.

To back up regular forces, Israel said it was calling up 18,000 military reservists, adding to 30,000 already mobilised. Hamas spokesman Sami Abu Zuhri responded with defiance to the Israeli escalation: "Netanyahu is killing our children and will pay the price. The ground invasion doesn't frighten us and the occupation army will sink in Gaza's mud."

Hamas wants Israel and Egypt, whose military-backed government is at odds with the Palestinian Islamists, to lift border restrictions that have deepened Gaza's economic hardship and unemployment.

Pope Francis telephoned Israeli President Shimon Peres and West Bank-based Palestinian President Mahmoud Abbas yesterday to express his "very grave concerns" over the conflict in Gaza, the Vatican said.

"A small group of fanatics are the cause of suffering in Gaza. Israel is doing everything to lower the flames and minimise civilian casualties," Mr Peres replied, according to statement from the president's office.

Mr Abbas, who held a prayer for peace with Mr Peres at the Vatican last month, told the pontiff he was "exerting all required effort, together with Egypt and all other parties to halt the bloodshed and relieve out people's suffering", according to the official Palestinian news agency Wafa.

Hamas said its men were shelling Israeli tanks with mortars and setting off bombs against troops crossing the sandy frontier under smokescreens. "It was a loud night. The armed men clashed with the tanks that advanced from northern side of the town for about 300 meters," said Amer Yamen, 37, a resident of Beit Hanoun near the barbed-wire border with Israel.

In all, 260 Palestinians, most of them civilians, have been killed since the fighting, which has destroyed or damaged hundreds of homes, began on July 8, Gaza officials said.

There have been two Israeli fatalities - a soldier and a civilian, who was killed by a rocket.