The Israeli army says all its weapons in the Gaza offensive were entirely legal, but until now has refused to specify which weapons it used.
White phosphorus sticks to human skin and will burn right through to the bone, causing death or leaving survivors with painful wounds which are slow to heal. Its ingestion or inhalation can also be fatal.
The investigation comes as the Israeli army said in a statement that its last troops had left Gaza, following a truce announced on Sunday.
Military officials said soldiers would remain near the border, ready to go back into the territory if any more rockets were fired into Israel.
CONFLICT IN FIGURES
More than 1,300 Palestinians killed
Thirteen Israelis killed
More than 4,000 buildings destroyed in Gaza, more than 20,000 severely damaged
50,000 Gazans homeless and 400,000 without running water
Gaza also remains under scrutiny from Israeli spy-planes, and its navy vessels are still firing sporadically at Gaza's beaches.
Israel also tightly controls Gaza's borders - and the UN has appealed for these restrictions to be relaxed.
The UN's humanitarian chief, John Holmes, said Israel needed to allow full access to Gaza so that work could begin on rebuilding the territory's wrecked infrastructure.
Palestinian medical sources in Gaza say at least 1,300 Palestinians were killed during the three-week conflict, which began on 27 December.
Thirteen Israelis, including three civilians, were killed, the Israeli army says.
In a statement, the Israeli army confirmed it would look into the allegations that it had misused white phosphorus, but said it "only uses weapons permitted by law".
"In response to the claims of NGOs and claims in the foreign press relating to the use of phosphorus weapons, and in order to remove any ambiguity, an investigative team has been established in the Southern Command to look into the issue," the army said.
According to the international convention on the use of incendiary weapons, the substance should not be used where civilians are concentrated.
Mobile phone footage of an Israeli attack on a UN school
During the campaign Human Rights Watch (HRW) said its researchers observed multiple shell-bursts of white phosphorus from the Gaza-Israeli border.
They argued that any use of white phosphorus in the heavily populated Gaza Strip would be illegal.
After Israel's unilateral ceasefire, and its opening border crossings to some international journalists, press photographs and video footage have been published appearing to show smouldering and burning lumps of white phosphorus which landed in populated areas.
Meanwhile, the International Atomic Energy Agency (IAEA) has confirmed it will investigate allegations made by Arab countries that Israel used depleted uranium weapons in Gaza.
Although there is no specific ban on depleted uranium, its use in weapons is controversial because of the potential health risks from its dust at impact sites.
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