Palestinian president Mahmud Abbas charged the offensive had unleashed "new crimes against humanity", in comments carried by the official WAFA news agency.

Abbas, whose repeated calls for militants to stop launching rockets have gone unheeded, urged the international community and UN Security Council to put pressure Israel into ending "this destructive policy immediately".

Inspecting troops based near Gaza, Israel's chief of staff Dan Halutz warned that militants had and would "pay a heavy price" if they continue their attacks, maintaining that "40 terrorists" had been killed in the offensive.

The return of troops to Gaza has evoked memories of the army's disastrous 1982 invasion of Lebanon where soldiers similarly sought to create a security zone but became bogged down in a deadly quagmire before pulling out in 2000.

"Israel is not willing to sink into a swamp in Gaza, and the IDF is operating in the field in order not to sink into Gaza," said Defence Minister Amir Peretz, who has been publicly criticised for his handling of the crisis.

But Palestinians have continued their rocket attacks unchecked, firing three towards Israel on Friday, bringing to 12 the number of such crudely manufactured projectiles launched since the army's latest offensive began.

Palestinian prime minister Ismail Haniya, whose offices were the target of an Israeli missile strike on Sunday, demanded international intervention to stop Israel's largest military operation since its pullout from Gaza.

His government -- boycotted both financially and politically by Israel and the West -- has put its security forces on high alert and urged all Palestinians to take up arms against the Israeli military.

Aid groups have expressed concern about the difficulties of providing assistance to 1.4 million people living in impoverished Gaza following months of financial crisis and the suspension of direct Western aid to the government.

"Public institutions and non-government organizations working in the West Bank and Gaza are struggling to provide water, sanitation, food, health and social assistance in the Gaza Strip," CARE International warned.

Hundreds of mourners perspiring in the oppressive heat attended the funerals for those killed on Thursday, the deadliest day in the Palestinian territories since March 8, 2002 when 46 people were killed in the Gaza Strip and West Bank.

In New York, experts from the 15-member Security Council met behind closed doors to discuss a draft, presented by Qatar on behalf of the UN's Arab Group, that calls on Israel as the occupying power to abide by its obligations under the Geneva Convention on the protection of civilians in time of war.

But the text in its present form appeared doomed in the face of opposition from the United States, a veto-wielding permanent member, because it does not mention the Palestinian rocket attacks and the capture of the Israeli soldier.

Ground forces advanced at least five kilometres (three miles) into northern Gaza to expand a self-declared buffer zone aimed at preventing rocket attacks, massing around Beit Hanun and moving into two neighbourhoods of Beit Lahiya.

Israeli forces took over the remains of the Dugit, Elei Sinai and Nissanit settlements, razed last year as part of Israel's historic pullout from Gaza that was meant to draw the curtain on a 38-year occupation.

Nevertheless, an opinion poll found that Israelis want to go further, with an overwhelming 82 percent seeing the assassination of Hamas leaders as the best means to release Shalit and stop rocket attacks.

Israel has already attacked the Gaza offices of both the Hamas premier and interior minister, raided multiple militant targets and detained a third of the cabinet, as well as the deputy speaker of parliament.

International appeals for restraint have largely fallen on deaf ears in what has become the worst Middle East crisis since Hamas came to power in March and Israeli Prime Minister Ehud Olmert formally took the helm in May.

Israel has flatly rejected the demands of Shalit's captors, countered by threats of a "new era of violence" from the armed wing of Hamas.