Footage shows chaotic scenes in Rafah - the BBC's Martin Patience reports
At least 10 people have been killed in a strike near a UN-run school housing Palestinians displaced by the Gaza conflict, medics say.
The attack hit the entrance of the facility in Rafah, where thousands of Palestinians are said to be sheltering.
The Israeli military has not commented but has been carrying out renewed strikes in Gaza.
Gaza health officials say 30 people have died on Sunday, while militants continue to fire rockets into Israel.
The latest exchanges came after Israel's military said that an officer it feared had been captured had now been confirmed dead. Hadar Goldin went missing on Friday near Rafah.
Confirmation of 2nd Lt Goldin's death means 66 Israelis have now died in the fighting, all but two of them soldiers. A Thai worker in Israel also died.
The latest official figures from Gaza's health ministry say that 1,740 Palestinians have been killed and 9,080 injured since the conflict began more than three weeks ago.
The UN warned that a "health disaster of widespread proportions" is unfolding in Gaza, with medical services facing collapse.
Forces redeployed
The Israeli shelling of the Jabaliya UN shelter last week, which killed 16 people, drew widespread international condemnation.
In the latest attack, eyewitnesses said a missile struck as people queued for food.
Israelis grieve for Hadar Goldin, who went missing in southern Gaza
At least 30 people were also hurt, Palestinian officials said. Images showed injured children being carried away.
Robert Turner, director of operations for the UN Palestinian refugee agency in Gaza, said: "The locations of all of these installations have been passed to the Israeli military multiple times. They know where these shelters are. How this continues to happen, I have no idea."
On Sunday, Israel said its forces were withdrawing from some areas of Gaza to a "temporary security strip" to reassess operations.
Reports said the military was close to completing its main aim of destroying tunnels used by militants to infiltrate Israel.
The attack struck the entrance of the school, where people were reportedly waiting for food
Israel has vowed to continue its Gaza operations until security is restored
Israel Defense Forces spokesman Lt Col Peter Lerner told Agence France-Presse: "We are redeploying within the Gaza Strip and taking out other different positions... so it won't be the same type of ground operation... It's changing gear but it's still ongoing."
However, PM Benjamin Netanyahu warned Israel would continue its offensive, saying it would "do whatever it must do to protect its people".
Hamas spokesman Fawzi Barhoum said the group would "continue to resist until we achieve our goals".
Delegations from Hamas, which controls Gaza, and Islamic Jihad arrived in Cairo on Sunday for talks with Egyptian and US officials over a possible truce.
However, Israel has said it will not attend the talks.
Analysis: BBC's Mark Lowen in Cairo
What was originally planned as peace talks between the warring sides in Gaza has now become something far weaker. The Palestinians have sent a delegation but the US appears to have downgraded their representation. Middle East Quartet envoy Tony Blair has also apparently changed plans to attend.
But, most significantly, Israel has pulled out, calling ceasefire talks with the Palestinians meaningless while rocket attacks continue. That has raised the possibility that Israel will simply complete its stated goal of destroying Hamas tunnels and then withdraw from Gaza without a long-term agreement.
Chris Gunness, from the United Nations Relief and Works Agency (Unrwa), told the BBC that a "health disaster of widespread proportions is rapidly unfolding in Gaza, with medical services on the verge of collapse".
He said: "Critical supplies of medicines and disposables are almost depleted and the damage and destruction of power supplies has left hospitals dependent on unreliable generators."
A boy wounded in a separate attack in Rafah on Sunday is taken for treatment
Sister Ayelet and fiancee Edna of Lt Hadar Goldin attend a news conference after his death was confirmed
Separately overnight, Israel said DNA evidence confirmed that Lt Goldin had died.
Israel's Defence Minister Moshe Yaalon and the chief military rabbi met the soldier's family at their home in Kfar Saba on Saturday night.
It was revealed on Sunday that Mr Yaalon was a distant relative but that this had been concealed as it was feared it might have been used by Hamas if Lt Goldin were being held captive.
Mr Yaalon said: "Hadar Goldin... was a member of my family. I've known him since he was born."
The funeral is expected to take place in Kfar Saba on Sunday afternoon.
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