The bodies of 18 Palestinians killed by Israeli tank fire have been buried amid emotional scenes in the northern Gaza town of Beit Hanoun.
Many of the bodies were draped in the yellow flags of Fatah
Thousands of mourners streamed through the streets from a mosque where prayers were said for the dead.
The bodies, most of them draped in the flags of militant and political groups, were carried through the crowds.
Israeli PM Ehud Olmert said the strike, which hit a civilian area, was the result of a "technical failure".
"I'm very uncomfortable with this event. I'm very distressed.
"I checked it and I verified it. This is not the policy," the Associated Press reported Mr Olmert saying.
But military operations against suspected Palestinian militants would continue, he added, admitting that further mistakes "may happen".
Mr Olmert repeated recent offers to hold talks with Palestinian Authority President Mahmoud Abbas.
Israel launched its current operation in and around Beit Hanoun last month in an effort to root out militants firing rockets.
Wednesday's deaths were caused when what onlookers described as a volley of tank shells hit a built-up civilian area.
Many of the dead were from one extended family.
Calls for revenge
In Beit Hanoun on Thursday one man carried the bodies of two babies, wrapped in traditional burial shrouds.
The dead were buried at a newly-opened cemetery on the edge of town.
Mourners cried out and chanted anti-Israeli and anti-US slogans as the procession moved through the streets.
There were calls for revenge against Israel and cries of sorrow for the latest deaths in Beit Hanoun, a regular flashpoint in the ongoing conflict between Israel and Palestinian militants.
"This town has known many black days and this is just one more, perhaps the blackest of them all," pharmacist Tayseer al-Masry, 36, told the AFP news agency.
The militants of Hamas and Islamic Jihad draw their support from the Palestinian sense of injustice and loathing for the Israeli army, says the BBC's Alan Johnston, who watched the procession.
Right now, he adds, the town is awash with those feelings.
Outside of Gaza there was widespread criticism of the Israeli strike.
France and Russia warned against an escalation of hostilities, while the UK foreign secretary, Margaret Beckett, said it was "hard to justify" the Israeli action.
In the US, the White House and the state department called for restraint from Palestinians, and President George W Bush expressed his sadness at the deaths.
GAZA DEAD SINCE END OF JUNE
Total: 247 fatalities
155 civilian deaths
57 deaths of children
996 wounded, including 337 children (34%)
Source: Physicians for Human Rights (28 June to 27 Oct)
The Palestinian President, Mahmoud Abbas, has already described the killings as a massacre, and demanded intervention by the United Nations.
He held a telephone conversation on Thursday with the exiled Hamas leader, Khaled Meshaal, in an effort to restart talks on a Palestinian government of national unity.
The UN Security Council is to discuss the current violence in Gaza later on Thursday.