Three Palestinians were killed and 17 wounded Tuesday by a massive explosion during an Israeli army incursion into the flash-point southern Gaza Strip town of Rafah.
The three dead were named as Akram Hadidi, 31, Maisara Abu Soneima, 19, and Mohammed Abu Naba, 18.
Among the wounded were three children under the age of 10 as well as a Palestinian cameraman for the Reuters news agency.
Witnesses said the blast was caused by a tank shell, but Israeli sources insisted their forces had nothing to do with the explosion.
Around half a dozen tanks had entered the town in the early hours in the latest of a series of operations designed to find tunnels which are used to smuggle in weapons from under the border with neighbouring Egypt.
The armed wing of the Islamic militant group Hamas said in a statement that it had fired rockets against the tanks and Israeli army jeeps near a clinic serving Palestinian refugees.
An Israeli source said that while there had been exchanges of fire, the fatal blast was not caused by the soldiers.
"The last time we fired in the area was about an hour and a half before. For sure it had nothing to do with us," he said.
Rafah has been the scene of some of the bloodiest fighting in the Middle East conflict in recent months, with some 40 Palestinians killed during a major Israeli offensive in May.
Residents said 10 houses had been bulldozed during the latest operation, which has so far failed to locate any tunnels.
Meanwhile, Hamas's military wing threatened to rain down rockets on the southern Israeli town of Sderot if the army does not pull out of the besieged northern Gaza town of Beit Hanun.
"Residents of Sderot, stop your army's crimes and get it out of Beit Hanun, or else you will be the ones paying the price," warned one of three masked gunmen on the footage aired by the Dubai-based satellite channel Al-Arabiya.
However, Palestinian prime minister Ahmed Qorei said Tuesday that contacts had been made with his Israeli counterpart Ariel Sharon's office in a bid to reach agreement on allowing Palestinian policemen to be armed in a bid to counter a growing security chaos in the territories.
Jordan's King Abdullah II, meanwhile, harshly criticised the Palestinian leadership for what he said were its shifting demands, and called for urgent reform at the top to allow the peace process to proceed.
"We want the Palestinian leadership to declare clearly what it wants and not surprise us every now and then with some decisions or by accepting things that it did not accept before," the king told Al-Arabiya satellite television. He called for "the correction of errors that people use as a pretext to put the blame on the Palestinian side ...
"The Palestinian leadership is requested to take decisions that would convince the world to deal with it as a leadership with a clear vision and a unified institutionalised authority," said the king.