Palestinian gunmen from militant group Hamas have attacked pro-Fatah forces near the Gaza-Israel border, killing at least eight people, reports say.
Chaos resulted from rival security forces doing most of the fighting
Pro-Fatah security officials described the attack as a major Hamas ambush on a Presidential Guards training camp.
At least 16 people have died in Gaza since Sunday in the worst outbreak of factional violence in several months.
Meanwhile a 500-strong contingent of fighters has entered Gaza from Egypt, thought to be pro-Fatah reinforcements.
EU monitors told the BBC the unarmed men in plain clothes were allowed through with the consent of the Israeli authorities.
Reports quoting western diplomats say the men were sent to Egypt by senior Fatah figure Muhammad Dahlan to receive advanced instruction in police tactics.
The Palestinian government says it has mobilised all of its security forces in an attempt to stop the violence.
But the BBC's Aleem Maqbool in the West Bank says in many cases it is the security forces themselves who are involved in the fighting.
The clash took place near the key Karni crossing point, and drew fire from Israeli troops guarding the border.
Reports say the Karni fighting erupted when Hamas gunmen approached a training base used by the pro-Fatah Presidential Guard which is responsible for security on the Palestinian side of the Karni crossing.
A Presidential Guard spokesman said the Karni base was attacked with rockets, rocket-propelled grenades and mortars, in remarks quoted by the Associated Press.
After the ambush, bodies were seen strewn in the grass near an overturned security vehicle.
The base had been set up with US assistance to train Palestinian security forces monitoring the crossing.
The recruits there are largely unarmed, Presidential Guard spokesman Ahmed Kaisi is quoted as saying.
"We consider this a serious provocation and a crime committed in cold blood," he said.
There has been no confirmation from Hamas of its fighters being involved in the clash.
At one point, the Israeli army said its troops opened fire at a group of gunmen who approached the border.
Witnesses said the Hamas force quickly withdrew when three Israeli tanks approached the Karni training camp.
Attack on Hamas
On Monday, Interior Minister Hani Qawasmi resigned amid the violence, prompting Palestinian Prime Minister Ismail Haniya to take personal control of security in Gaza.
Overnight, a member of its armed wing was reportedly shot dead and another supporter was wounded in eastern Gaza City, when unknown gunmen ambushed a minibus carrying Hamas fighters.
Another Hamas loyalist was reported wounded when gunmen opened fire near a checkpoint controlled by pro-Fatah security officers.
The latest round of killing erupted on Sunday when five people died and 18 were injured in inter-factional clashes, ending a period of relative calm since Hamas and Fatah members joined a unity government in a bid to end a period of chaos in the Gaza Strip.
About 170 people have died in clashes between the Fatah and Hamas factions since Hamas won parliamentary elections in January 2006.