The offensive, 10 months into Israel's campaign to eliminate Hamas militants, took place as US-backed mediators sought to finalise a peace deal that would free remaining hostages taken by the militants in their cross-border rampage on October 7.
The Gaza Civil Emergency Service said teams had collected about 60 bodies of Palestinians killed by Israeli forces over the past week from the area of Tel Al-Hawa and the edges of the Sabra neighbourhood in Gaza City.
Both residents and rescue teams cautioned that while tanks withdrew from some areas, Israeli snipers and tanks continued to control high ground at some locations, and warned residents against trying to return to their homes in those areas.
"There are bodies scattered in the streets, dismembered bodies, there are bodies of entire families, there are also bodies inside a home of an entire family that was completely burned," Gaza Strip Civil Defence spokesperson Mahmoud Basal said in comments carried by media in Hamas-run Gaza.
Israeli forces were working to dismantle Hamas capabilities in Gaza City, the military said. (EPA PHOTO)
The Israeli military said on Thursday its forces were working to dismantle Hamas capabilities in Gaza City, and it "follows international law and takes feasible precautions to mitigate civilian harm".
It said the same was not true of Hamas.
The armed wings of Hamas and Islamic Jihad said they had fought fierce battles against Israeli forces, attacking them with anti-tank rockets and mortar fire, killing and wounding many.
There has been no Israeli army comment on those claims.
Home to more than a quarter of Gaza's residents before the war, Gaza City was largely razed in late 2023, but hundreds of thousands of Palestinians have returned to homes in the ruins.
Israel has once again ordered them out, though it is unclear where residents can go safely.
Israel controls most of Gaza's borders and is also attacking central and southern Gaza.
Arab mediators, backed by the United States, are trying to reach a ceasefire deal that would free Israelis held hostage by Hamas in return for many Palestinians jailed by Israel.
On Friday, a senior Hamas official blamed Israel for a failure to build on momentum created when the Islamist faction dropped a key demand in the US-drafted ceasefire offer a week ago to clear the way for a deal.
Benjamin Netanyahu accused Hamas of making demands that contradicted the ceasefire being negotiated. (AP PHOTO)
"Israel hasn't made a clear stance over Hamas proposal. After discussion with the mediators in Doha, Qatar, Israel told them the delegation would go back for consultation with the Israeli government," the official, who asked not to be named, told Reuters.
"There is an attempt at stalling and wasting time," the official said.
There was no immediate comment from Israel.
Israeli Prime Minister Benjamin Netanyahu said on Thursday he remained committed to the Gaza ceasefire framework being negotiated and accused Palestinian militant group Hamas of making demands that contradicted it.
Netanyahu did not say what those demands were.
Two Egyptian sources said on Thursday that talks had made progress but security arrangements and ceasefire guarantees were still being worked on.
Part of the discussion concerned an electronic surveillance system along the border between Gaza and Egypt that could allow Israel to pull back its troops from the area if a ceasefire is agreed, according to two Egyptian sources and a third source familiar with the matter.
Hamas-led militants killed 1200 people and took more than 250 hostages on October 7, according to Israeli tallies.
Since then, Israel's forces have killed more than 38,000 Palestinians, medical authorities in Gaza say.
