AT least 100 Palestinians have been killed in fighting in Gaza as Israel escalated its military offensive in the coastal strip.

Israel struck at symbols of Hamas control in Gaza yesterday, firing tank shells that closed the strip's only power plant in the heaviest bombardment in the fighting so far.

Flares turned the sky over Gaza City orange overnight and by daybreak, as the conflict entered its fourth week, heavy clouds of dust hovered over the territory.

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The pounding came after Israeli Prime Minister Benjamin Netanyahu warned of a "prolonged" campaign against Hamas.

It was not clear if this meant Israel has decided to go beyond the initial objectives of decimating Hamas' ability to fire rockets and demolishing the group's military tunnels dug under the Gaza- Israel border.

Already, the intensity and the scope of the current Gaza operation is on a par with an invasion five years ago, which ended with a unilateral Israeli withdrawal after hitting Hamas hard.

Israeli warplanes carried out dozens of attacks yesterday, levelling the home of the top Hamas leader in Gaza, Ismail Haniyeh, and damaging the offices of the movement's Al-Aqsa satellite TV station, a central mosque in Gaza City, and government offices.

Mr Haniyeh, whose house was turned into a mountain of rubble by a pre-dawn airstrike, said in a statement that "destroying stones will not break our determination".

No one was hurt in Mr Haniyeh's home. Since the start of the war, Israel has targeted the homes of several Hamas leaders but none have been killed.

Gaza's power plant was forced to shut down after two tank shells hit one of three fuel tanks.

The shelling sparked a large fire and a huge column of smoke was seen rising from the site.

Even before the shutdown, Gaza residents only had electricity for about three hours a day because fighting had damaged power lines.

Lt Col Peter Lerner, an Israeli military spokesman, did not comment on the explosion at the plant, but said Israel's latest strikes signal "a gradual increase in the pressure" on Hamas.

International calls for an unconditional ceasefire have been mounting in recent days.

More than 1110 Palestinians have been killed and more than 6500 wounded since July 8. The UN has estimated 75 per cent of those killed are civilians. In the southern town of Rafah, seven members of one family were killed in an airstrike and seven members of a second family were killed when tank shells hit their home.

In central Gaza, seven people, including five members of one family, where killed by tank shelling. Israel has lost 53 soldiers, along with two civilians and a Thai worker. Tens of thousands of Gazans have been displaced by fighting in border areas which have come under heavy tank fire.

Despite appeals for a ceasefire, both sides have been holding out for bigger gains.

Hamas has said it will not stop fighting until it wins international guarantees that a crippling border blockade of Gaza will be lifted.

Israel said its troops will not leave Gaza until they have demolished the tunnels which have been used by Hamas to sneak into Israel to try to carry out attacks.