Israeli tanks and warplanes have continued to bombard the Gaza Strip, as Hamas militants stuck to their demand for the lifting of an Israeli and Egyptian blockade in the face of US efforts to reach a cease-fire.
The 16-day conflict has claimed the lives of 718 Palestinians, most of them civilians, Palestinian health officials say.
Israel has lost 32 soldiers, all since July 17, when it widened its air campaign into a full-scale ground operation aimed at halting rocket fire from Gaza and destroying a sophisticated network of cross-border tunnels.
Two Israeli civilians and a Thai worker in Israel have also been killed.
Gaza police and health officials say six members of the same family and an 18-month-old infant boy were killed when Israeli fighter jets struck the Jebaliya refugee camp early Thursday.
Twenty others were injured in the strike, they say, and rescue officials were digging through the rubble of flattened homes, looking for survivors.
US Secretary of State John Kerry, who met for the second time this week with United Nations chief Ban Ki-moon, flew to Israel Wednesday on an Air Force jet, despite a ban imposed a day earlier by the US Federal Aviation Administration on commercial flights into Ben-Gurion Airport because of Hamas rocket fire.
The FAA dropped the ban just before midnight, but European airlines have extended their cancellations through Thursday.
''We certainly have made steps forward,'' Kerry said in Jerusalem yesterday, without elaborating. ''There's still work to be done.''
Underscoring the challenges he faces, the leader of Hamas insisted the Islamic militants would not relent until their main demand of lifting an Egyptian-Israeli blockade of the Gaza Strip is met.
''When it comes to the balance of power in this crisis between us and Israel, they are the executioners, the aggressors, the occupiers, the settlers, and we are the true owners of the land,'' Khaled Mashaal said in a televised speech from his home-in-exile in Doha, Qatar.
''We will not accept anything but the end of the siege.''
Israel imposed the blockade in 2006 after Hamas and other militants abducted an Israeli soldier in a deadly cross-border raid.
It tightened the siege in 2007 after Hamas seized power from forces loyal to Western-backed Palestinian President Mahmoud Abbas, but had eased some of the restrictions in recent years.
Egypt tightened its own restrictions last year after the overthrow of a Hamas-friendly government in Cairo and has destroyed many of the cross-border smuggling tunnels that sustained Gaza's economy, and which were also used by Hamas to bring in arms.
RECORD ISRAELI CASUALTIES
Using tunnels, mines, booby traps and snipers, Hamas fighters have inflicted record casualties on Israeli troops waging an offensive in the Gaza Strip, applying years of training in urban warfare with a new tactical acumen and suicidal resolve.
The Israelis say weapons and know-how supplied by Iran and its Lebanese ally Hezbollah make Hamas a more formidable foe.
Four days after Israel launched a withering ground assault on the Palestinian Islamist militants in their stronghold of Shejaia following intensive air strikes, the army still does not have complete control of the area.
Smoke from shelled homes and the buzz of Israeli drones clog the sky above the wrecked district on Gaza's eastern border.
The thud of a buried explosive aimed at a troop carrier is met with an hour-long rain of Israeli artillery fire that shakes the width of the coastal strip, sending the deafening sound bouncing off buildings as far as the shore.
Exploiting a vast network of secret tunnels to snipe at enemy troops and blast their vehicles even inside Israel, Hamas has killed 32 Israeli soldiers - almost three times as many as in the last major ground clashes in a 2008-9 conflict.
''The al-Qassam brigades continue to give repeated surprises, and every day the holy warriors arise from where the (Israeli) occupation could not foresee,'' the group said last week.
''They fight... face to face with the enemy in retaliation for the blood of the martyrs that the occupier spills daily.''
The action has lived up to the fierce rhetoric.
Hamas has far outstripped fellow militants in Islamic Jihad and other groups in sending drones, scuba commandos and tunnel raiders to take the fight into Israel.
In one such infiltration, Hamas fighters emerged wearing full Israeli uniform, but were let down by one key detail - they were carrying Kalashnikov rifles, not standard issue M16s or Tavor assault rifles.
In the most deadly incident for Israel yet, on the first day of its incursion to begin destroying the tunnels on Sunday, Hamas says its fighters watched as an enemy armoured personnel carrier lurched into a web of booby traps they had laid.
''Our holy warriors detonated the minefield with such force that (the carrier) was destroyed. They advanced on it, opened its doors and finished off all left inside,'' the group said.
Israel offered a different account, saying the vehicle was part of a convoy and was hit my multiple anti-tank missiles.
Israel said six soldiers were killed, while another thought to have been in the vehicle is missing, believed dead.
Hamas said it captured him but has not released his picture.
The Israeli military acknowledges Hamas' increased skill.
''They have undergone extensive training, they are well supplied, well motivated and disciplined. We have met a more formidable enemy on the battlefield,'' said Israeli military spokesman Lieutenant-Colonel Peter Lerner.
Israel says it has so far killed more than 200 Palestinian fighters.
''We are not surprised about it because we knew that they were preparing for this battle. They didn't just invest in the tunnels for the last two or three years,'' he added.
Speaking off the record, another army official said: ''They have thrown everything at us. Missiles, ambushes, even (bomb-laden) donkeys and dogs. It's proving a real challenge ... We have to break their motivation, show them it is not worth it.
''We hope that if we break Shejaia, then that will show them our determination. That is a real command centre for them... What is remarkable is that in the past eight years they have basically built an underground Gaza. It's astonishing,'' he said.
Confined in the crowded sandy coast enclave of 1.8 million, where poverty and unemployment hover around 40 percent, weary Gazans say they hope the battle will break the blockade that Israel and Egypt impose on them. They have very little to lose.
Hamas leaders hope to achieve that goal through the prowess of their men at the front, trained to inflict casualties and grab soldiers to gain political leverage.
Morale was high and Hamas fighters were preparing for a fight during a visit by Reuters in April to a training camp of its military wing on a vast sandy expanse in northern Gaza.
Kitted up in full Israeli battle gear, young cadets sat in classrooms taking notes on lessons in combat tactics.
They showed off manoeuvres where they simulated raining down mortars on mock-up tanks, on which two groups of fighters then pounced from nearby tunnels, with one combatant hoisting over his shoulder a limp volunteer posing as an Israeli soldier.
In addition to increasing the range and payload of more than 1,000 mostly homemade rockets it has hurled at Israel in two weeks, Hamas has stepped up its weapons procurement.
''Hamas leaders have tried to say through their statements that everything Israel's been hit with so far was completely and purely Gaza-made. (But) Hamas did not deny benefiting from foreign imports,'' said Gaza analyst Adnan Abu Amer.
The Islamist movement is unlikely to be deterred by the losses its has suffered at the hands of a stronger enemy.
''There are conflicting reports about Hamas's losses in terms of fighters. Since Israel has claimed Hamas's armed wing numbers 20,000 men, the martyrdom of 60 or 70 can not be described as a huge loss,'' Abu Amer said.
Videos distributed by al-Qassam's media arm appear to show the strength of the group's arsenal.
''The demonstrated use of anti-tank guided missiles against small IDF units on foot, rather than against armoured vehicles, shows a clear intent to simply inflict casualties and a recognition of the (Israeli army's) superior armour defence,'' said Charles Lister, a visiting fellow at the Brookings Center in.
A senior Israeli intelligence official briefing foreign reporters on Wednesday said ''radical axis'' countries - Iran, Syria or Hezbollah guerrillas in Lebanon - had provided Hamas with a new generation of ground weapons.
He cited the Russian-made cornet and the shoulder-fired RPG-29 which is ''more of a rocket than a missile. You can use it in an urban area when you have to fight against very close forces. This is something you don't make by yourself.''
In 22-days of fighting during a 2008-9 conflict, Hamas and other militant groups largely melted away, allowing Israeli tanks to approach the outskirts of Gaza City.
The militants killed just six soldiers then, and two more in an eight-day round of battle in 2012, which did not escalate into an Israeli ground incursion.
Israel's Lerner cited outside aid for their new strength.
''(They were trained) by Iran. Mostly Iran. It is the school of Iran. It is the thought process of Iran. It is Iran with Hezbollah. It is the same type of tactics that we have seen.''
Israel's loss of 12 soldiers on Sunday was the largest single-day toll since its forces pushed into South Lebanon in an attempt to dislodge Hezbollah militants there in 2006.
The Israeli intelligence officer said Syria, Iran and Hezbollah could have taught Hamas new tactics over the Internet.
Nobody from the Israeli side expected an easy push into Gaza, Israeli military affairs analyst Ehud Yaari said, but its stated aim of destroying the tunnels remains difficult.
''It's very painful, but I don't think anybody assumed that it could be a 'no casualties' operation ... It seems they've been able to systematically uncover more and more tunnels, with the caveat that I'm not sure the Israelis are prepared to sustain the damage to uncover many more,'' he said.
Subterranean warfare may be Hamas's most potent innovation.
After spending years and possibly hundreds of millions of dollars on building the network, Hamas may be keen to preserve some of its tunnels by stopping the fighting soon.
''They're popping up more and more from underground to try and hit something in hopes that a ceasefire will be established as soon as possible,'' Yaari said.
Abu Amer, the Gaza analyst, believes both sides are smarting and the military gains may encourage Hamas toward a ceasefire.
''Hamas realises that the time factor is painful for both sides. Hamas has made achievements and my guess that neither Hamas nor Israel are willing today to prolong the confrontation,'' he said.