THE smell of death hangs over Gaza City after thousands of terrified Palestinians fled through the streets, escaping Israeli shells that rained horror and slaughter onto their tree-lined suburb.

Tearful mothers clutched babies in blankets, little boys walked barefoot, weary fathers carried toddlers in their arms.

Some families rode on the back of donkey carts and piled into cars. Seven people sat in the gaping digger of a giant bulldozer, slowly driving clear of the smoke and bloodshed.

The mangled bodies of men, women and children yesterday filled the morgue at Gaza's main hospital, with other corpses reported to be still trapped under rubble in the Shijaiyah district, on the north-eastern fringes of the Mediterranean enclave.

After daybreak, dozens of wounded from the Shijaiyah area were rushed to the central Shifa Hospital. Frantic parents carried children bloodied by shrapnel, and the emergency department quickly overflowed, forcing doctors to treat some patients on mattresses in a hallway.

"The gate of hell has opened, and shrapnel came through the windows," said Shijaiyah resident Jawad Hassanain, speaking by phone. He said he and his family sought shelter in a nearby building after their house shook from the explosions.

"From 12.30am until 4am, all you could hear is heavy bombardment, the smell of fire and the smell of death. By 4.30, and after the call for the prayer, we were able to get in an ambulance." It took them to his sister's neighbourhood, he said.

"They killed our people," said Ahmed Mansour, 27, lying on his stomach as his back and arm trickled blood. "They even shelled people as they fled their houses. What kind of human beings could do that?"

Medics said more than 60 people died in the assault, which came on the 13th day of an Israeli offensive aimed at halting salvos of rockets fired incessantly at Israel by Palestinian militants.

"Do you see what Israel does to us? Do you see how the strongest powers in the world allow it to attack civilians indiscriminately and now we're left with nothing," said Amer al Segali, a father of 10, clasping his young son's hand.

"They think they're above the law, allowed to do whatever they want," he said, walking towards central Gaza, hoping to find peace and refuge elsewhere.

The Israeli military said that it had urged all the residents of Shijaiyah to quit the area two days ago, accusing Hamas militants of firing 140 rockets from the area since July 8 and of using civilians as human shields.

"The night was so difficult, shelling all the time, every minute. We finally realised there was nothing to do but flee," said Sameh Hamada, 40, walking with his wife and children, carrying nothing.

His wife, wiping away tears, interjected: "There were bodies and limbs on the street!"

Israel says it only targets militants and has made calls and broadcast warnings to almost half Gaza's 1.8 million people urging them to evacuate various neighbourhoods.

Hamas has told residents to stay put and many locals say they have nowhere to go to. The enclave's borders with both Israel and Egypt are sealed off, meaning that people can only move around within the narrow confines of Gaza.

The Shifa hospital, already crammed after 13 days of violence, struggled to cope with the new influx of dead and wounded. The corpses of two women lay scorched on the ground, along with two headless children and another cut in half.

A fleet of ambulances and cars brought in victims, including the body of a journalist wearing a blue armoured emblazoned with the word "press". A dead paramedic in bright green garments was also brought in.

In the trauma ward, there was nowhere for doctors to put all the wounded. "We can't help. These wounded are dying … We are trying to operate, but whatever we do, they still die," one doctor said.