Tens of thousands of Israeli troops backed by tanks battled Hamas fighters in Gaza on Sunday as the death toll from the offensive to end militant rocket attacks passed 510.
Israeli forces moved into the fringe of Gaza City while families fled or hid in cellars awaiting a second night of combat. The Israeli government fought off intense international pressure over its biggest military operation since its 2006 war in Lebanon.
At least 63 Palestinians were killed by tank shells or missiles fired from warplanes since the ground offensive was launched on Saturday night, Gaza medics said.
Israel said one soldier was killed by a mortar shell and about 30 were wounded.
Columns of Israeli troops and tanks surrounded Gaza City and fighting was reported in outer districts. Fierce clashes were also reported around the northern towns of Beit Lahiya, Beit Hanun and Jabaliya.
Explosions and machine gun fire rocked the territory of 1.5 million people. Hamas fighters fired mortar rounds and detonated roadside bombs in front of the advancing troops, witnesses said.
Moawiya Hassanein, head of Gaza medical emergency services, told AFP the number of Palestinians killed since the Israeli operation was launched on December 27 was now 512, including 87 children.
Five members of the same family died when one tank shell hit their car near Gaza City, emergency services said.
Three ambulance workers were killed when they were hit by a missile as they helped wounded victims of the conflict, medics said.
Aid groups said the offensive had aggravated a humanitarian crisis for the population, who have no electricity, no water and now face dire food shortages. Hospitals were only running on backup generators.
International efforts to halt the conflict sought new impetus after the UN Security Council failed to agree a statement on the conflict, with the United States giving strong backing to Israel.
US Secretary of State Condoleezza Rice cancelled a planned trip to China this week because of the Gaza crisis.
A Russian presidential envoy and an EU ministerial delegation headed to the Middle East to make pleas for a ceasefire.
President Nicolas Sarkozy was also to hold talks with Israeli and Palestinian leaders on Monday.
Israeli Prime Minister Ehud Olmert refused to call off the offensive in telephone talks with Sarkozy, Russian President Dmitry Medvedev and a host of other foreign leaders, his office said.
The Kremlin said that in the conversation, Medvedev "stressed the importance of reaching a ceasefire as quickly as possible."
Olmert told New York mayor Michael Bloomberg: "Israel is determined to continue its military offensive until the complete cessation of terror attacks against it and the return of calm to southern Israel."
Israel unleashed "Operation Cast Lead" on December 27 with the declared aim of ending rocket attacks into Israel from Gaza that resumed after a six-month truce ended in December.
Rocket fire over the past week has killed four people in Israel. Thirty two rockets and mortar rounds were fired across the border on Sunday and hit Sderot, Ashdod and other towns, lightly injuring three people.
Israel believes Hamas may be seeking "a respectable" way out of the conflict having underestimated the scope of the military offensive, Social Affairs Minister Isaac Herzog said.
He told CNN television that Hamas was under "huge pressure" from the military operation. "The intelligence reports that we've received today in the Israeli cabinet are that the Hamas is looking for a respectable way of finding a way to get out of this situation," he said.
Israeli army spokesman Avi Benayahou told public television that "Hamas has come to the conclusion that it has made an enormous strategic error by refusing to extend a ceasefire accord" which ended on December 19.
But the offensive has sparked spiralling anger in the Muslim world and protests across the globe.
Israeli troops shot and killed a protester during a demonstration in the West Bank. Tens of thousands of Turks staged an anti-Israeli rally in Istanbul.
Protesters threw rocks and eggs at police outside the Israeli embassy in Oslo and police responded with tear gas.
The UN Security Council failed to agree a statement calling for a ceasefire in closed-door consultations late Saturday.
Hamas spokesman Fawzi Barhum condemned the Security Council action as "a farce" dominated by the United States, which has strongly supported Israel.
Egypt summoned the ambassadors of the UN Security Council's five permanent members -- Britain, China, France, Russia and the United States -- to protest at the delay in passing a ceasefire resolution.
Egyptian President Hosni Mubarak condemned "in the strongest terms" Israel's ground attack which his office called a "terrifying aggression."
