Israel has warned its may intensify its two-week-old offensive

Three Palestinians have been killed and dozens more injured by new Israel tank fire and air strikes on the Gaza Strip, medical sources say.

Reports of the deaths came hours after Israel dropped leaflets warning Gazans to stay away from areas used by Hamas, saying its operation would escalate.

In Syria, Hamas leader Khaled Meshaal said the conflict in Gaza had killed any chance of a settlement with Israel.

Some 820 Gazans and 13 Israelis have reportedly died in 14 days of fighting.

Of the three reported deaths on Sunday, one woman was killed by Israeli artillery fire in the southern Gaza Strip, Reuters reported.

Two militants were also killed by an air strike while in a car on a coastal road, medical workers said.

In the latest attacks, dozens of Palestinians were reportedly injured in southern Gaza, near the village of Khouza to the east of Khan Younis.

Palestinian medics in the area said many of those injured were suffering from burns and gas inhalations - symptoms they said indicate exposure to white phosphorous.

The reports could not be independently confirmed. Although white phosphorous is legal in munitions, its use against civilians is banned under international law.

New York-based rights group Human Rights Watch has accused Israel of using white phosphorous in its current Gaza operations.

Israel's military categorically denied the reports from Khouza, saying all weapons used by Israel used complied with the law.

Although Gaza is one of the most densely-populated territories in the world, there are areas of open ground on the fringes of the built-up districts.

'The third stage'

Saturday's leaflet drop prompted speculation Israel is poised to adopt new tactics in its battle with Palestinian militants.

Phone messages in Arabic urged residents to keep away from sites linked to Hamas, saying that the Israeli Defense Forces (IDF) were not targeting Gazans but "Hamas and the terrorists only".

One phone message said "the third stage" of the operation would start soon. It is two weeks since air strikes on Gaza began. The ground attacks started a week ago.

Correspondents say "phase three" could see Israeli forces moving deeper into cities and refugee camps - involving new risks for Israeli soldiers and civilians in the Gaza Strip.

As Hamas militants reportedly fired more than 30 rockets across the border on Saturday, Israel launched more than 70 attacks by air, land and sea on what it said were rocket-launching sites, weapons stores and smuggling tunnels.

Medical staff 235 children are among at least 820 Palestinians killed in the conflict.

Israel is preventing international journalists from entering the coastal strip, and none of the figures could not be independently confirmed.

GAZA CRISIS BACKGROUND

In his speech from exile in Syria, Hamas political leader Khaled Meshaal condemned the Israeli offensive as a "holocaust".

He said the war in Gaza had brought resistance to every Palestinian household, adding a breakthrough would come only if Israel immediately stopped the bombardment, lifted the blockade of Gaza, opened all crossings and withdrew its troops.

Tens of thousands of people also attended rallies held across the US, Europe and the Middle East against the Israeli offensive on Saturday.

Rocket fire

In Cairo, Palestinian Authority President Mahmoud Abbas urged all sides to accept an Egyptian-French ceasefire initiative after meeting Egyptian President Hosni Mubarak.

Egypt negotiated the last ceasefire between Hamas and Israel but, correspondents say, this conflict has strained an already difficult relationship between Cairo and Hamas.

Hamas, which was elected in 2006 and took control of Gaza in June the following year, sent delegates to Cairo for the second time in a week for separate talks.

But Mr Abbas - who heads the secular Fatah movement, bitter rivals of Hamas - does not control Gaza, and analysts say he will have little impact on the course of the conflict.

Israel and Hamas have both ignored a UN Security Council call for an immediate ceasefire.

Israel says the continued rocket attacks showed the resolution was "unworkable", while Hamas insists any truce must include the ending of Israel's economic blockade of Gaza.

Aid agencies say Gaza's 1.5 million residents are in urgent need of food and medical aid.

The latest violence erupted as a six-month truce between Israel and Hamas unravelled in November and comes one month before a parliamentary election in Israel.

Source: BBC News