The Israeli army has begun a ground offensive in southern Gaza to try to gain the release of an Israeli soldier.
The incursion comes hours after Israeli aircraft struck at bridges and a power plant in the Gaza Strip.
Cpl Gilad Shalit was abducted by Palestinian militants during a raid on an Israeli post near Gaza on Sunday.
Israel had warned of a massive military assault if he was not freed and its tanks have been massing along the border with Gaza for several days.
It is unclear how many troops are being used in the operation, launched from the Kerem Shalom crossing near southern Gaza.
This major incursion comes less than a year after Israel pulled soldiers and thousands of settlers from Gaza, which it had first occupied in 1967.
Since completing the withdrawal in September 2005, the Israeli army has regularly shelled targets in Gaza in an attempt to halt the firing of rockets into Israel by Palestinian militants.
Many Palestinian militants and civilians have been killed in the shelling.
The Israeli forces have taken up position near the town of Rafah, shortly after passing Gaza's disused international airport.
According to the BBC's Gaza correspondent, Alan Johnston, the troops' objective appears to be fairly limited - they have not entered Rafah and are camping on farmland outside the city.
An Israeli military spokeswoman said the soldiers were planning to set up observation posts.
The Associated Press news agency quotes Palestinian witnesses as saying the troops had entered the area under the cover of tank shells.
Palestinian militants anticipating an Israeli assault have been erecting barricades and preparing hideouts and ambush positions.
A spokeswoman for the Israeli armed forces said they had not encountered any resistance from the Palestinians.
Israeli military officials have been quoted as saying Prime Minister Ehud Olmert had backed a "limited operation" targeting the "terrorist infrastructure".
Gaza's militants have been readying defences
Hours before the ground assault, Israeli jets attacked three bridges and a power plant in the Gaza Strip.
The Israeli military confirmed the first strike on the bridge was aimed at stopping militants from moving Cpl Shalit.
The strike on the plant plunged much of Gaza into darkness. It is not yet clear if there were any casualties.
Cpl Gilad Shalit was captured when Palestinian militants burrowed under the Gaza border and attacked an Israeli army position, killing two soldiers.
Israel has rejected the militants' demands for Palestinian women and children held in Israeli jails to be freed in exchange for information about the soldier.
Earlier on Tuesday, rival Palestinian factions, Hamas and Fatah, agreed a document outlining a common political platform.
As part of the agreement, Hamas said it would accept a Palestinian state on the West Bank and Gaza - while maintaining its refusal to recognise the legitimacy of Israel.
The Hamas government also authorised the Fatah leader and President of the Palestinian Authority, Mahmoud Abbas, to conduct negotiations with Israel.
A Fatah official said the aim of the deal was to present a united front in talks.
The BBC's Middle East editor, Jeremy Bowen, says there is little in the document to hint at a longer-term peace deal with Israel.
There is no peace process on the ground, he says, and the dynamic of violence in the area has outpaced efforts at peace.