Israel stepped up its ground offensive in Gaza early on Friday pounding targets with artillery fire and using tanks and infantry to battle Hamas fighters.
Orange flashes illuminated the eastern Gaza Strip as Israeli gunboats off the Mediterranean coast fired shells and tracer bullets, and helicopters fired across the border.
Hamas fired rockets back into Israel towards the southern towns of Ashdod and Ashkelon.
Palestinian health officials said 23 Palestinians had been killed since Israel launched its ground offensive against the densely-populated strip of 1.8 million Palestinians on Thursday. Israel said one of its soldiers had been killed in fighting.
A video clip released by the military showed six tanks rolling in through the sand dunes of Gaza, after a soldier opened a border fence, and two long rows of foot soldiers.
"We are using a very high level of fire power and artillery," Israeli military spokesman Brigadier General Motti Almoz said.
"A great number of soldiers are in action in the Gaza Strip, soldiers are overtaking their targets, tunnels, Hamas targets," Almoz said, and several "points of friction" with gunmen.
Israel signaled the invasion would be limited in scope - targeting tunnels dug by gunmen - and said it was not intended to topple Hamas, the Gaza Strip's dominant Islamist group.
Hamas spokesman Sami Abu Zuhri responded with defiance, saying, "we warn (Israeli Prime Minister Benjamin) Netanyahu of the dreadful consequences of such a foolish act".
Live television showed interceptions of rockets by Israel's Iron Dome anti-missile system and no casualties were reported.
Almoz said one soldier had been killed and several wounded in fighting Israeli media said was concentrated in several areas in the north and south of the territory.
The soldier was Israel's second fatality in eleven days of fighting which spilled over into a land offensive late on Thursday. A rocket attack killed a civilian two days ago.
In all, 251 Palestinians, most of them civilians, have been killed since the fighting began on July 8, Israel bombarding Gaza while Hamas launched rockets against Israel.
Israeli military spokesman Lieutenant Colonel Peter Lerner said on Twitter Israel had killed 14 Palestinian gunmen in "exchanges of fire throughout Gaza" and destroyed 20 rocket launchers.
Hamas's armed wing said in a statement they had detonated three explosives in northern Gaza and "clashes are ongoing". It also said its fighters had repelled Israeli forces trying to enter another Gaza town, Beit Hanoun, wounding seven soldiers.
Israel began the air and sea offensive in what it called a response to mounting rocket salvos, more than 100 a day, fired by Gaza militants into its cities, sending hundreds of thousands of Israelis dashing to shelters as far north as the Tel Aviv business hub.
At least 20 more rockets were fired at Israel on Friday, a military spokeswoman said.
DEFIANCE, "DREADFUL CONSEQUENCES"
A statement from Netanyahu's office late on Thursday said he had given orders to destroy tunnels that militants use to infiltrate Israel and carry out attacks.
The current conflict was largely triggered by the killing of three Israeli teens in the occupied West Bank last month and the death on July 2 of a Palestinian youth in a suspected revenge murder.
Israel briefly held its fire on Tuesday after Egypt, which is also Gaza's neighbour, announced a truce plan; but Hamas and other militant groups rejected the proposal, saying it had not addressed their demands.
"The directive for ground action was approved by the security cabinet after Israel agreed to the Egyptian ceasefire proposal, whereas Hamas rejected it and continued firing rockets at Israeli cities," the statement from Netanyahu's office said.
TANKS ROLL IN
The fighting has been the worst between Israel and Palestinians in two years. The United Nations Security Council will meet on Friday to discuss the developments.
The U.N. Secretary-General Ban Ki-moon, speaking after the announcement of the ground assault, implored Israel to do more to stop Palestinian civilian deaths.
A statement from the Israeli military said another 18,000 reserve soldiers would be mobilized to join more than 30,000 already called up.
Hamas wants Israel and Egypt, whose military-backed government is at odds with the Islamist movement, to lift border restrictions that have deepened economic hardship in the territory. Hamas is also suffering from a cash crunch, unable to pay its employees in Gaza for months.
Fighting resumed immediately after the end of a five-hour humanitarian truce on Thursday requested by the United Nations to allow Palestinians to stock up on food.
Hamas leaders have talked up their "tunnel campaign" against the Israeli enemy.
One publicity video showed Palestinian fighters hauling rockets through a narrow passage to load onto a launcher that appears buried in an orchard. It is then fired remotely after its mechanised cover slides open.
French Foreign Minister Laurent Fabius will visit the Middle East on Friday to try to defuse the crisis, and for discussions about putting a European mission on the Gaza-Israel border, a diplomatic source said on Thursday.
Israel last mounted a large-scale invasion of the Gaza Strip during a three-week war in late 2008 and early 2009 that claimed 1,400 Palestinian and 13 Israeli lives.