Israel has pulled out of the Rafah refugee camp in Gaza following a large-scale raid in which nine Palestinians were reportedly killed.
Several militants were killed in the Rafah raid
Israel said Tuesday's operation was aimed at destroying tunnels used to smuggle arms from Egypt into Gaza.
The raid was one of the bloodiest in recent months as gun battles erupted between Israeli forces and militants.
In the West Bank, meanwhile, a Palestinian was killed in a car explosion in the city of Nablus.
The cause of the blast was not immediately known, Palestinian security sources said.
Witnesses said about 40 tanks and armoured vehicles entered Rafah refugee camp on the Gaza-Egypt border on Tuesday morning.
Israeli forces said soldiers located and destroyed a tunnel 17m (56ft) deep and 800m (2624ft) long used for smuggling weapons.
Palestinian medical sources said at least three of those killed in the raid were civilians.
Israel has sporadically targeted Rafah to try to disrupt attempts by Palestinians to smuggle weapons across the border through a network of tunnels.
"The discovery of this tunnel inside a residential building is further evidence of the cynical use by the terror organisations of civilians, further endangering them," the army said in a statement.
Camp residents said that several homes were damaged, along with water and sewage
systems. Several power lines were also reportedly destroyed.
The dead reportedly included a 50-year-old man and a member of the armed wing of the radical Islamic Jihad movement.
The raid was condemned by United Nations Secretary General Kofi Annan, who "urges the government of Israel to refrain from such violent actions and return to peaceful negotiations," his spokesman said.
The Palestinian militant group Al-Aqsa Martyrs' Brigades, which lost two militants in the raid has vowed to take revenge inside Israel, Reuters reports.
"Blood for blood and killing for killing," chanted thousands of Palestinians at funerals for those killed in the raid.