Another three Palestinians were killed by Israeli soldiers on Saturday during an Israeli incursion into the Khan Younis refugee camp in the Gaza Strip.
The wounded were carried to Gaza's hospitals
It brings to 11 the number of Palestinians killed during the two-day incursion. At least 40 were injured.
Several Palestinian houses were demolished and about 300 Palestinian families have fled the area.
Late on Saturday, the Israeli army said it had moved out of the camp. Residents said they saw tanks leaving the area.
Hundreds of Palestinians who had evacuated their homes began returning on Saturday evening.
Some found their homes demolished or damaged, but the extent of the destruction was not immediately clear in the darkness, the Associated Press reported.
Before the pullout, residents were unable to bury the dead because Israeli forces were in control at the local cemetery, medics told the Reuters news agency.
Israeli troops and armoured vehicles were attacked by anti-tank rockets and bombs, although no Israelis were injured, the Israeli army said.
Israel said the operations in Khan Younis were intended to reduce the number of mortar and rocket attacks on nearby Jewish settlements.
The army said at least 30 rockets and mortar bombs were fired at settlements in the Gaza Strip this week, killing a foreign worker and injuring 17 other people.
The raid was the largest Israeli military operation since the death last month of the Palestinian leader, Yasser Arafat.
In a separate development, six Palestinians were rescued from a collapsed tunnel under an Israel-controlled corridor in the Egypt-Gaza border area on Friday.
Witnesses said they were in good health after more than 12 hours in the tunnel, suspected to be used for smuggling.
Israel has occupied the Gaza Strip since 1967, but is planning to pull out settlers and the troops who protect them as part of a disengagement plan to enhance its security.
Its troops will maintain control of the territories' borders, coastline and airspace.