Israeli helicopters struck Gaza's Rafah on Thursday, residents said, with Hamas militants reporting street battles in the southern city after top US diplomat Antony Blinken said a truce was still possible.
Israeli ground forces have been operating in Rafah, near the Egyptian border, since early May to pursue Hamas Palestinian fighters, despite widespread international alarm over the fate of displaced people crowded in the city.
Western areas of Rafah came under heavy Israeli fire from the air, sea and land, residents said.
"There was very intense fire from warplanes, Apaches (helicopters) and quadcopters, in addition to Israeli artillery and military battleships, all of which were striking the area west of Rafah," one of them told AFP.
The Ezzedine Al-Qassam Brigades, the armed wing of Islamist movement Hamas, said its fighters were battling Israeli troops on the streets of the same area.
The Gaza war began with Hamas's unprecedented October 7 attack on southern Israel which resulted in the deaths of 1,194 people, mostly civilians, according to an AFP tally based on Israeli official figures.
The militants also seized 251 hostages. Of these, 116 remain in Gaza although the army says 41 of them are dead.
Israel in response launched a military offensive in Gaza that has left at least 37,202 people dead, also mostly civilians, according to the health ministry in the Hamas-ruled territory.
The top world court, the International Court of Justice, in May issued a binding ruling for Israel to halt any offensive in Rafah and elsewhere that could bring about "the physical destruction" of the Palestinians.
Israel responded that it had not "and will not" engage in such operations against the Palestinians.
Efforts to reach a truce stalled when Israel began ground operations in Rafah, but US President Joe Biden in late May launched a new effort to secure a deal.
On Monday the UN Security Council adopted a US-drafted resolution supporting the plan.
Blinken, in Doha on Wednesday for the last stop of a tour to promote Biden's ceasefire roadmap, said the United States would work with regional partners to "close the deal".
Hamas responded to mediators Qatar and Egypt late Tuesday. Blinken said some of its proposed amendments "are workable and some are not".
A senior Hamas official, Osama Hamdan, said the group sought "a permanent ceasefire and complete withdrawal" of Israeli troops from Gaza, demands repeatedly rejected by Israel.
The plan includes a six-week ceasefire, a hostage-prisoner exchange and Gaza's reconstruction.
It would be the first truce since a week-long November pause in fighting that saw hostages freed and Palestinians released from Israeli jails.
Blinken said Israel was behind the plan, but Israeli Prime Minister Benjamin Netanyahu, whose government has far-right members strongly opposed to the deal, has yet to formally endorse it.
Blinken expressed hopes that gaps could be closed.
"We have to see... over the course of the coming days whether those gaps are bridgeable," he said.
In a statement early Thursday, Hamas urged Blinken to put "direct pressure" on Israel.
"He continues to talk about Israel's agreement of the latest (ceasefire) proposal, but we have not heard any Israeli official speak out on this," it said.
A UN investigation concluded Wednesday that Israel had committed crimes against humanity during the Gaza war, while Israeli and Palestinian armed groups had both committed war crimes.
The independent Commission of Inquiry's report is the first in-depth investigation by UN experts into Gaza's bloodiest-ever war.
Israel's foreign ministry on Thursday dismissed the report as "biased and tainted by a distinct anti-Israeli agenda".
The war has led to widespread destruction of homes and other infrastructure, with hospitals out of service and the UN warning of famine.
The World Health Organization said more than 8,000 children aged younger than five have been treated for acute malnutrition in Gaza, where only two stabilisation centres for severely malnourished patients currently operate.
"Despite reports of increased delivery of food, there is currently no evidence that those who need it most are receiving sufficient quantity and quality of food," said WHO chief Tedros Adhanom Ghebreyesus.
In central Gaza's Bureij refugee camp, resident Ahmed al-Rubi said he wanted an end to the "severe suffering we are going through".
"I hope for a ceasefire," he told AFP. "What has happened to us is enough."
Israeli campaign group the Hostages and Missing Families Forum, which seeks a negotiated return of the remaining hostages, said Hamas's response "represents another step towards accepting Israel's hostage deal proposal", referring to the Biden plan.
Some Gazans have called on Hamas to do more to secure an agreement.
"Hamas does not see that we are tired, we are dead, we are destroyed," a Gaza man told AFP, giving his name as Abu Shaker.
Along with the fighting in Rafah, an AFP reporter on Thursday reported overnight strikes and shelling elsewhere in the coastal territory.
Gaza's civil defence agency said three bodies were recovered from a home in Nuseirat, central Gaza, after an Israeli strike.
On Wednesday Yemen's Iran-backed Huthi rebels claimed an attack on a merchant ship in the Red Sea, part of an ongoing campaign they say is an act of solidarity with Palestinians.
Maritime security agencies said the ship was struck southwest of Hodeida port and was taking on water.
Lebanon's Iran-backed Hezbollah movement, a Hamas ally, said it fired waves of missiles into Israel on Wednesday in retaliation for an Israeli strike that killed one of its commanders.
