UN Secretary General Ban Ki-moon has called on both Israel and Palestinian militants in the Gaza Strip to halt the violence of the past few days.
Children are among the victims in Gaza
Addressing the Security Council, he condemned Israel's "excessive" use of force and called Palestinian rocket attacks on Israel "acts of terrorism".
The Security Council later voiced deep concern at the events but failed to condemn either side.
At least 54 Palestinians and two Israeli soldiers died on Saturday.
It was one of the bloodiest days in Gaza since Israel withdrew in 2005.
Local doctors say at least 13 of the Palestinians were civilians, including eight children.
More than 150 Palestinians, and seven Israelis, were also injured on a day that saw both Israeli air and ground assaults and new rocket attacks on Israel.
"While recognising Israel's right to defend itself, I condemn the disproportionate and excessive use of force that has killed and injured so many civilians, including children," said Mr Ban.
"I call on Israel to cease such attacks.
"I condemn Palestinian rocket attacks and call for the immediate cessation of such acts of terrorism."
Israeli UN representative Daniel Carmon said Israel had a "duty" to defend itself under the UN charter.
Palestinian representative Riyad Mansour accused the international community of an "unjustifiable and unacceptable" silence on events in Gaza.
In its statement, the Security Council said these acts should not be allowed to deter the political process aimed at establishing two states, Israel and Palestine, living side by side.
Diplomats said Libya, representing Arab countries and the Palestinians on the council, would not agree to criticise the Palestinian rocket attacks and the US would not accept language on Israel's actions.
An Israeli at his home in Sderot after Palestinian rocket attacks
The US, which as a permanent member can veto any resolution, explained its position.
"There is a clear distinction between terrorist rocket attacks that target civilians and action in self-defence," White House spokesman Gordon Johndroe said.
US Secretary of State Condoleezza Rice is due to meet Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert this week to try to revive peace talks.
Mr Abbas, who lost control of Gaza to his Islamist rivals Hamas last summer, strongly condemned Israel's operations on Saturday.
Israeli operations began on Wednesday after a rocket fired by Hamas militants killed an Israeli student in the southern town of Sderot, the first such death in nine months.
More than 80 Palestinians have been killed since then, with fighting on Saturday centred on the north Gaza town of Jabaliya and its nearby refugee camp.
In a statement on Saturday, Israel's Defence Minister Ehud Barak blamed Hamas for the killings, saying his country was "not happy about civilians being hurt".
Israel has said it may launch a full-scale attack on Gaza in response to the rocket attacks.
The BBC's Katya Adler in Jerusalem says Israel's leaders have been under pressure from some quarters to launch a ground invasion.
However, a recent opinion poll has indicated a majority of Israelis favour a truce with Hamas.
Early on Sunday, Israeli planes attacked the offices of Hamas leader Ismail Haniya in Gaza City, witnesses said.
The empty offices were destroyed and several people in neighbouring buildings injured, they said.
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