Israeli forces edged into the Gaza Strip's most populous area on Sunday, killing at least 27 Palestinians in an offensive stepped up in defiance of international calls for a ceasefire.
Medical officials said about half of the Palestinian dead in the latest fighting in the Hamas-ruled territory were civilians.
"Israel is getting close to achieving the goals it set for itself," Israeli Prime Minister Ehud Olmert told his cabinet in Jerusalem, giving no timeframe for an end to the 16-day-long war.
"But patience, determination and effort are still needed to realise these goals in a manner that will change the security situation in the south," Olmert said, referring to Hamas rocket attacks that continued to hit Israeli towns.
Hamas leader Khaled Meshaal said his ruling Islamist group would not consider a ceasefire until Israel ended its air, sea and ground assault and lifted a Gaza blockade. A Hamas delegation held talks in Cairo on an Egyptian truce plan.
Israel, describing as unworkable a U.N. Security Council resolution calling for a ceasefire, wants a halt to rocket attacks and arrangements to ensure that Hamas cannot rearm through tunnels under the Egypt-Gaza border.
An Israeli defence official was to visit Egypt on Monday to press for tougher anti-smuggling measures. German diplomatic sources said Berlin offered to send specialists next week to Egypt to discuss ways to improve border security and Cairo had responded positively.
Backed by helicopter gunships, Israeli troops and tanks pushed into eastern and southern parts of the city of Gaza, confronting Hamas militants who fired anti-armour missiles and mortar bombs.
The Palestinian death toll since Israel's offensive began on Dec. 27 stands at 869, many of them civilians, Gaza medical officials said. Thirteen Israelis -- three civilians hit by rocket fire and 10 soldiers -- have been killed, official Israeli figures showed.
In Washington, U.S. President-elect Barack Obama said in broadcast remarks he would begin the search for Middle East peace immediately on becoming president and the Gaza conflict only underscored his determination to become involved early.
New street fighting killed 10 gunmen, Palestinian medical workers said. Another three fighters and a member of the Hamas police force were killed by Israeli air strikes.
Medical officials said 13 civilians, including four members of a family, were killed by Israeli forces and that Israeli shelling of two villages south of the city of Gaza had set 15 houses on fire.
Israel's military said it attacked a mosque used to store weapons, 10 squads of gunmen, three rocket-launching sites and the house of a Hamas commander.
In Jerusalem, Cabinet Secretary Oved Yehezkel said Hamas leaders were hiding in Gaza's foreign missions, hospitals and bunkers to elude Israeli forces. He did not name the missions.
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