Israeli troops advanced into Gaza suburbs for the first time early Tuesday, residents said, hours after Prime Minister Ehud Olmert warned Islamic militants that they face an "iron fist" unless they agree to Israeli terms for an end to war in the Gaza Strip.
Hamas showed no signs of wavering, however, with its leader, Ismail Haniyeh, saying the militants were "closer to victory."
Sounds of the battle could be heard clearly around the city of 400,0000 as the Israeli forces, backed by artillery and attack helicopters, moved into neighborhoods east and south of Gaza City, as Israeli gunboats shelled the coast from the west.
Residents said Israeli tanks rolled into public areas of the Tel Hawwa neighborhood, pushing back militants. Tens of thousands of Palestinians live in apartment buildings in the neighborhood south of Gaza City.
One of the residents, Khader Mussa, 35, told The Associated Press by telephone that he saw two apartment buildings on fire. He said he was huddling in the basement of his building with 25 other people, including his pregnant wife and his parents. "The gates of hell have opened," he said. "God help us."
Several other buildings were on fire, witnesses said, including a lumberyard. Thick smoke blanketed the area.
The Israeli military confirmed that a battle was in progress but gave no details. Dr. Moaiya Hassanain, a Palestinian Health Ministry official, said dozens of calls for ambulances had been received, but they cold not be dispatched because of the fighting.
Slow progress on truce
Despite the tough words and clashes, Egypt said it was making slow progress in brokering a truce, and special Mideast envoy Tony Blair said elements were in place for a cease-fire.
As Olmert spoke in the Israeli city of Ashkelon, Israeli tanks, gunboats and warplanes hammered suspected hiding places of Hamas operatives who control the poor, densely populated territory just across the border. The Israeli military said Hamas fired about 20 rockets at Israel on Monday, fewer than previous days.
Gaza's Hamas prime minister insisted on an Israeli withdrawal from Gaza and the opening of blockaded border crossings as part of any truce.
"As we are in the middle of this crisis, we tell our people we, God willing, are closer to victory. All the blood that is being shed will not go to waste," Haniyeh said on Hamas Al Aqsa television. But he said the group was also pursuing a diplomatic track to end the conflict that "will not close."
Haniyeh sat a desk in a room with a Palestinian flag and a Quran in the background. His location was unclear; Israeli airstrikes have targeted militant chiefs, and most are in hiding.
The fighting began Dec. 27 and has killed more than 900 Palestinians, about half of them civilians, according to Palestinian medical officials. Thirteen Israelis, including 10 soldiers, have been killed.
As diplomats struggled for traction in truce efforts, Olmert said Israel would end military operations only if Hamas stops rocketing Israel, as it has done for years, and is unable to rearm after combat subsides.
"Anything else will be met with the Israeli people's iron fist," Olmert said. "We will continue to strike with full strength, with full force until there is quiet and rearmament stops."
A few hours before Olmert spoke, a rocket hit a house in Ashkelon but caused no casualties. Olmert addressed regional mayors in the relative safety of the basement of a public building during his two-hour visit; he has toured other towns hit by rockets since the war began.
Later, he tempered his tough talk, saying: "I really hope that the efforts we are making with the Egyptians these days will ripen to a result that will enable us to end the fighting."
Ashkelon is 10 miles from the border with Gaza. The Israeli military says Hamas has Iranian-supplied rockets that can reach 25 miles into southern Israel.
Inside Gaza, an Israeli battalion commander identified only as Lt. Col. Yehuda said troops had not met significant resistance and had found several houses booby-trapped either with regular explosives, or by sealing the windows and doors and opening cooking gas valves.
"A couple of days ago, an armed squad popped up from a tunnel that was concealed by a nearby building. We took them out with tank fire and a bulldozer," he said.
In another incident, the commander said, his men spotted a suicide bomber on a bicycle.
"He ran off to take cover in a building, presumably to draw us in," Yehuda said. "We demolished the building on top of him with a bulldozer."
Brig. Gen. Eyal Eisenberg said troops were "tightening the encirclement" of Gaza City and were "constantly on the move."
The comments by Yehuda and Eisenberg were approved by Israeli military censors. They spoke to a small group of reporters who accompanied Israeli units inside Gaza. Israeli forces have not allowed journalists to enter Gaza to cover the war.
Israeli warplanes pounded suspected Hamas positions in Gaza City, and navy gunboats fired at least 25 shells. Smoke billowed over buildings.
At least 20 Palestinians died Monday, some of them from wounds suffered on previous days, Gaza health officials said.
A girl, a doctor and a Hamas militant were killed in the northern Gaza Strip, said Basim Abu Wardeh, head of Kamal Adwan hospital.
The doctor rushed to evacuate the wounded from a building where two airstrikes had taken place and was killed by a third, Abu Wardeh said. Four other medics were injured, one critically.
The Israeli military said four soldiers were injured, one seriously, in what an initial inquiry concluded was a "friendly fire" incident in northern Gaza.
Israel has sent reserve units into Gaza to reinforce thousands of ground forces already in the territory, and fighting has persisted despite a U.N. Security Council resolution calling for a cease-fire. Egypt has assumed a role as mediator between Israel and Hamas.
Talks "are progressing slowly but surely, because each party wants to score some points," Hossam Zaki, the spokesman for Egypt's Foreign Ministry, told the British Broadcasting Corp. "We would like to be able to bridge some gaps and then proceed immediately to a cease-fire."
Zaki, however, said Egypt could not provide certain guarantees that Israelis seek, such as a halt to rocket fire.
"We'll enhance our efforts, but this is not an issue between Israel and Egypt," Zaki told the BBC. "It is an issue between Israel and Gaza, and this is something that will have to be worked out, as the (U.N.) Security Council says, in Gaza."
Much of the diplomacy focuses on an area of southern Gaza just across the Egyptian border known as the Philadelphi corridor that serves as a weapons smuggling route, making Egypt critical to both sides in any deal. The name of the corridor is an Israel military label.
Israel wants those routes sealed and monitored as part of any peace deal, and has been bombing tunnels that run under that border.
"I think the elements of an agreement for the immediate cease-fire are there," Blair said in Cairo. He added that, while more work needed to be done, he hoped to see a cease-fire "in the coming days."
Israeli Defense Ministry official Amos Gilad planned to travel Tuesday to Egypt for talks.
In Paris, French Foreign Minister Bernard Kouchner said European military observers should be sent to Gaza to monitor any eventual cease-fire.
Israel's chief military spokesman, Brig. Gen. Avi Benayahu, said the fighting was "difficult and complex" and that Hamas militants were setting boobytraps and firing missiles from the rooftops of civilian homes.
"There is a whole city built underground in Gaza. Lots of big weapons warehouses," Benayahu said. Soldiers also uncovered a tunnel dug inside Gaza that led 300 yards into Israel, he said.
In Monday's fighting, the army said it carried out more than 25 airstrikes, hitting squads of gunmen, mortar launchers and two vehicles carrying Hamas militants.
It said ground troops came under fire from militants in a mosque. An Israeli aircraft attacked the squad, and Israeli troops then took over the mosque, confiscating rockets and mortar shells.
With Israeli troops surrounding Gaza's main population centers, Israeli leaders have said the operation is close to achieving its goals. Security officials say they have killed hundreds of Hamas fighters, including top commanders, but there has been no way to confirm the claims.
Desperate for food
Aid agencies said they have resumed relief operations in Gaza, but fighting still prevents them from evacuating the sickest people and reaching all those who need help.
The international Red Cross said it brought in seven truckloads of medical supplies and would distribute them to hospitals overwhelmed by the influx of patients.
International aid groups, however, say Israel is not doing enough to protect Palestinian civilians as well as aid workers. Tens of thousands of people have been displaced and many basic food items are no longer available, the office of the U.N. Humanitarian Coordinator said.
As many 88 percent of Gaza's residents now require food aid, up from 80 percent before the war, said Helene Gayle, president of the international aid agency CARE.
The three-hour lull in fighting that Israel allows for humanitarian aid to move around Gaza is not sufficient, she said.