JABALIYA, Gaza Strip (AFP) - At least 21 Palestinians and three Israelis were killed in raging gunbattles in the Gaza Strip during a massive Israeli raid that provoked some of the worst fighting in the impoverished area in months.
In the latest bloodshed, at least seven Palestinians were killed when an Israeli tank shell landed on a group of people standing near the entrance to the Jabaliya refugee camp, Palestinian hospital sources said.
The Israeli raid, which started two days ago, intensified late Wednesday after a Palestinian rocket launched from northern Gaza killed two young children in the Israeli town of Sderot as families were celebrating the start of Sukkot, the Jewish Feast of Tabernacles.
It was the deadliest violence in the Gaza Strip since May when dozens were killed on both sides as Israel sought to destroy tunnels used by Palestinian militants to smuggle weapons from Egypt.
Among the dead were two Israeli soldiers.
Israeli radio said Defence Minister Shaul Mofaz had decided to carry out a large-scale military operation to halt Palestinian rocket attacks. It said the army was considering temporarily re-occupying the territory and could mobilize reserve troops.
Yasser Arafat's Palestinian Authority urged the international community to intervene at once and put an end to Israel's "massacres" in the Gaza Strip, according to an aide to the Palestinian leader.
The narrow streets of the impoverished Jabaliya camp, home to 100,000 people, resembled a battlefield and hospitals were put in emergency mode to treat the flow of casualties.
Dozens of militants armed with assault rifles, hand grenades and rocket-propelled grenades hid in alleys, away from Israeli snipers posted on rooftops.
Loud explosions could be heard as troops and militants engaged in intense exchanges of fire. At least seven houses and the outside wall of a school were destroyed by the army.
The UN agency for Palestinian refugees warned that the Israeli operations had disrupted its operations and called on the Jewish state to guarantee the safety of its staff.
"UNWRA has been forced to suspend many of its normal operations, including the resumption of much needed emergency food aid," it said, adding that 750 staff members were unable to go home and that many were exposed to "considerable risk."
Israeli troops first launched its raid Tuesday in a bid to stop the firing of the so-called Qassam rockets, named after the military wing of the Islamic Resistance Movement Hamas.
It intensified after two Israeli children were killed Wednesday in Sderot, just across the Gaza border.
The latest violence raised the death toll to 27 Palestinians and five Israelis since the army moved en masse into the area late on Tuesday.
It also lifted to 4,382 the overall number of people killed since the start of the Palestinian intifada, or uprising, almost four years ago to the day. They include 3,358 Palestinians and 953 Israelis, according to an AFP count.
At least eight of the Palestinian casualties were armed militants who clashed with Israeli troops near Jabaliya and the nearby town of Beit Hanun.
Another two Palestinian gunman were shot dead by troops after they killed an Israeli settler woman and a soldier near the Jewish settlement of Alei Sinai.
The army said another three Israeli soldiers had been lightly in clashes, while another soldiers was killed in a separate grenade attack.
"The gunmen launched grenades and opened fire at the soldiers at an observation post. The soldiers identified the two gunmen and returned fire. An IDF soldier was killed and two soldiers were injured," a spokesman said.
The other Palestinian victims, killed by snipers and tank shells in and around the Jabalyia camp which troops were trying to storm, were all believed to be unarmed civilians, including at least one teenager.
Prime Minister Ariel Sharon was mulling a military strategy to put an end to rocket attacks in talks with senior political and security officials.
Sharon told them to "take every necessary measure to stop the firing of Qassams," government spokesman Avi Pazner added, referring to the weapons named after the Ezzedine al-Qassam Brigades.
Close to 90 Palestinians have been reported wounded in the incursion, among them a cameraman who was in serious condition after being hit by gunfire.
Senior Hamas leader Said Siam said his group considered the launching of rockets against Sderot as "a legitimate act of self-defence against (Israel's) aggression."
"Our mujahadeen (fighters) will only stop firing rockets if the agression stops," he said.