Israeli government spokesman Mark Regev told the BBC that Israel had used white phosphorus but not as an anti-personnel weapon.
The substance, which is used to lay smokescreens, is legal for use on open ground but its use in built-up areas where civilians are found is banned under international conventions.
"We tried to be as surgical as humanly possible in a difficult combat situation," he said.
Mr Regev criticised Amnesty's methodology, saying the report's authors used what he called "tainted" data provided by Hamas.
He said Israel was conducting its own investigation into whether any of its munitions were used outside international law.
Hamas also criticised the report's findings as "unjust and unfair".
"It [the report] equates between the criminal and the victim," said Hamas spokesman Fawzi Barhoum.
"There is not a single country in the world which exports weapons to the Hamas movement. At the same time main countries, big countries and superpowers are exporting nuclear and phosphorus weapons, as well as weapons of mass destruction, to the Zionist occupier [Israel]."
Israel launched an air strike on central Gaza on Monday after one of its patrols came under fire near the Kissufim border crossing but there were no immediate reports of casualties on either side.
A single rocket launched from Gaza also hit Israeli territory without causing injuries or damage, Israel's military said.
The incidents came despite unilateral truces declared by both Israel and Hamas on 18 January.
Outgoing Israeli Prime Minister Ehud Olmert has decided to replace his main negotiator at the talks mediated by Egypt on a lasting truce with Hamas in Gaza, officials say.
Amos Gilad criticised Mr Olmert last week for what he called an inconsistent approach to the talks, which he described as insulting to the Egyptians.
Donatella Rovera, the head of an Amnesty fact-finding mission to southern Israel and Gaza, said: "Israeli forces used white phosphorus and other weapons supplied by the USA to carry out serious violations of international humanitarian law, including war crimes.
[Israeli] attacks resulted in the death of hundreds of children and other civilians and massive destruction of homes and infrastructure
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.