"Israel is a country that reacts vigorously when its citizens are fired upon, which is a good thing," Foreign Minister Tzipi Livni told Israel Radio on Monday. "That is something that Hamas now understands and that is how we are going to react in the future, if they so much as dare fire one missile at Israel."

Israeli security officials say they have killed hundreds of Hamas fighters, including top commanders. However, there has been no way to confirm the claims, and Hamas officials say the group is determined to keep fighting.

The army also says Hamas has been avoiding pitched battles against the advancing Israelis, resorting instead to guerrilla tactics as its fighters melt into crowded residential areas.

In Monday's fighting, the army said it carried out more than 25 airstrikes, hitting squads of gunmen, mortar launchers and two vehicles carrying Hamas militants.

It also said ground troops came under fire from militants holed up inside a mosque. An Israeli aircraft attacked the squad, and Israeli troops then took over the mosque, confiscating rockets and mortar shells.

Israeli leaders are expected to decide in the next day or two on whether to push the offensive into a third phase — in which the army takes over larger areas of Gaza. This move would require the use of thousands of reserve units massed on the border with Gaza.

A push into densely crowded urban areas would threaten the lives of many more civilians. More than 20,000 Palestinians have already fled Gaza's rural border areas and crowded into nearby towns, staying with relatives and at U.N. schools turned into makeshift shelters.

International aid groups have repeatedly said Israel must do more to protect Palestinian civilians, who are believed to make up about half of the dead.

Human Rights Watch has accused Israel of firing artillery shells packed with the incendiary agent white phosphorus over populated areas of Gaza. The chemical, used for creating smoke screens and for illuminating battlefields at night, ignites when it comes in contact with oxygen and can cause serious burns and spark fires as it drifts to the ground in long trails of smoke.

Marc Garlasco, a military analyst working for the rights organization, said he witnessed such shelling from the Gaza-Israel border last weekend. He reviewed AP Television News footage on Monday of similar midair fire that he said was white phosphorus.

"You basically have what looks like the head of a jellyfish and the tentacles coming down on fire," he said. "It'll burn for approximately five to 10 minutes, depending on atmospheric conditions and this causes extreme fire and the potential for civilian harm."

The Israeli army refuses to say whether it's using phosphorus, saying only it is "using its munitions in accordance with international law."