Israel began a ground operation in Gaza late Thursday on the tenth day of an offensive to stamp out rocket fire from the Hamas-run enclave, that has cost 246 Palestinian lives.
The assault follows a brief humanitarian truce and an urgent appeal by both Washington and the UN that Israel redouble its efforts to avoid harm to civilians.
"I regret that despite my repeated urgings, and those of many regional and world leaders together, an already dangerous conflict has now escalated even further," UN chief Ban Ki-moon told reporters, urging Israel to "do far more" to spare Palestinian civilians.
Hamas warned Israel would pay a "high price" for its escalation.
"Following 10 days of Hamas attacks by land, air and sea, and after repeated rejections of offers to de-escalate the situation, the Israel Defence Forces (army) has initiated a ground operation within the Gaza Strip," an army statement said.
As the operation began, Israel approved the call-up of another 18,000 reservists, taking the total number approved to 65,000 for an operation aimed at protecting Israeli lives and strike "a significant blow to Hamas's terror infrastructure," the army said.
Shortly beforehand, the military began an intensive bombardment of the enclave, by air and sea as well as by tanks massed along the border.
Salvoes of rockets lit up the sky, and a seafront hotel in Gaza City housing scores of journalists shook violently with the force of the shelling by sea, an AFP correspondent said.
Israel launched Operation Protective Edge on July 8 to stamp out rocket fire from Gaza, pounding the enclave with an intensive campaign from both the air and the sea.
Earlier on Thursday, Cairo lashed out at the Islamist Hamas movement, saying it could have saved dozens of lives had it accepted an Egyptian-brokered truce.
"Had Hamas accepted the Egyptian proposal, it could have saved the lives of at least 40 Palestinians," Egypt's Foreign Minister Sameh Shoukri said.
An initial ceasefire proposal which was to begin on Tuesday was accepted by Israel but ignored by Hamas, which continued to fire rockets over the border.
- Targeting tunnels -
Israel said the aim of the operation was to destroy the network of tunnels riddling the Gaza Strip, some of which are used for assembling rockets and others used for staging cross-border attacks on southern Israel. One such attack was foiled by Israeli forces early Thursday.
"Prime Minister Benjamin Netanyahu and Defence Minister Moshe Yaalon, this evening instructed the IDF to commence ground action to strike at the terrorist tunnels from the Gaza Strip into Israeli territory," a statement from the premier's office said.
A military spokesman said Israel had decided to send in troops after repeated efforts to end the conflict had failed.
"We have tried three times in the last ten days to de-escalate; every time we have been met with more aggression," Major Arye Shalicar told AFP.
"Our goal is to strike Hamas infrastructure and operatives in several places in the strip -- north, east and south. Part of the infrastructure that we will target is tunnels."
Military spokesman General Moti Almoz urged Gaza residents to flee areas where the army was operating, warning that the ground campaign would "be extended as much as necessary."
Following an appeal by Washington and the UN, the military pledged to invest "unprecedented efforts" to limit harm to civilians.
On the ground, Palestinian witnesses reported gun battles breaking out east of the southern city of Khan Yunis, with military sources confirming it was one of the areas in which the troops were operating.
Since the operation was announced, five Palestinians have been killed, including a five-month-baby, raising the overall death toll in Gaza to 246, medics said.
- 2nd drone downed -
Earlier on Thursday, at least five children were among those killed in Israeli strikes on Thursday with tank fire hitting a rehabilitation hospital east of Gaza City where most of the patients are paralysed or in a coma.
Two brothers, aged 7 and 8, who were playing on a rooftop with their 10-year-old cousin were among those killed shortly after the truce expired, medics said.
Since the operation began, 1,530 rockets fire from Gaza have hit Israel, and another 311 shot down by the Iron Dome air defence system, army figures show.
Also Thursday, the air force shot down a Hamas drone near the southern port city of Ashkelon for the second time this week, the army said.
Meanwhile, the UN's Palestinian refugee agency said it had launched a probe after finding 20 rockets hidden in one of its vacant schools in Gaza, calling it was a "flagrant violation" of international law.
Ahead of the operation, an Israeli official told AFP a truce had been agreed with Hamas which was to have begun at 0300 GMT Friday.
But Hamas denied the claim, with spokesman Sami Abu Zuhri telling AFP the news was "incorrect."
Earlier on Thursday, Palestinian leader Mahmud Abbas met Egyptian President Abdel Fattah al-Sisi in Cairo as regional efforts to end the violence continued.
During the day, Gaza residents had enjoyed a short respite for the first time in 10 days as both sides agreed to respect a five hour humanitarian lull to allow for medical aid to be transported into Gaza and let people stock up on food and other essentials.