Israeli missile attacks across Gaza have killed five Palestinians and wounded a number of others.
Israel expanded its operation into Beit Lahiya on Wednesday
Two Hamas members were reported dead in one attack in the northern Jabaliya refugee camp, where Israel has pursued a massive 17-day military operation.
Three people were killed when Israeli missiles hit Rafah refugee camp at the southern end of the Gaza Strip.
A 70-year-old man was among the dead. The others were described as militants directing anti-tank fire at troops.
The elderly civilian was identified by medics as Ismail Assawalhi. His 65-year-old wife was among seven other people wounded.
Witnesses said Israeli troops with armoured bulldozers demolished at least 16 houses in Rafah before withdrawing at daybreak.
The military described it as a "routine" operation to destroy firing positions used by Palestinian gunmen.
Israeli troops withdrew from the centre of the northern Gaza town of Beit Lahiya on Thursday morning, witnesses said, which they had entered on Tuesday night.
During the incursion, the army had bulldozed large swathes of land, including hundreds of trees, and several roads and houses, witnesses said.
Palestinian poet and Beit Lahiya resident Omar Khalil Omar said his family property had been damaged and his mother's grave torn up.
"I don't know what threat my mother's grave could pose to the state of Israel," Mr Omar said in comments quoted by the Associated Press news agency.
"They simply want to uproot us from here, whether we are alive or dead. But the grave will stay and we will stay," he said.
The army did not immediately comment on the destruction. The area is known for being used by Palestinian militants who fire crude home-made rockets at the nearby Israeli town of Sderot.
The two-week-old Israeli operation is the deadliest in Gaza since the start of the Palestinian uprising four years ago and has left more than 120 Palestinians dead.
Reports say 57 militants have been killed, but most of the rest are thought to be civilians, including many children.
One Israeli soldier has been killed and 13 wounded during the operation.
Israel says the north Gaza operation, codenamed Days of Penitence, was launched to wipe out the threat of the Qassam rockets being fired at Sderot, just beyond the north-east borders of Gaza.
Israel has occupied the Gaza Strip since capturing it in the 1967 war.
Prime Minister Ariel Sharon's government intends to evacuate 8,000 Jewish settlers now living there along with the troops who protect them from Gaza in 2005 as part of a disengagement plan.
The Israeli army will keep control over Gaza's borders, coastline and airspace.