Even as the Israeli government tentatively welcomed a cease-fire proposal from Egypt and France, its military was instructed to continue its assault on Hamas.
The proposal could mark the first sign of a possible exit from 12 days of bloodshed in Gaza. But Israel says it needs guarantees that any cease-fire will halt rocket fire and prevent Hamas from rearming, while Hamas officials in Syria told CBS News that they could not agree to the plan because it does not guarantee open border crossings or an end to a crippling blockade.
Israeli strikes in response to continued Hamas rocket fire on southern Israel have killed at least 688 Palestinians since Dec. 27, including around 350 civilians, among them 130 children, according to Palestinian officials.
Israel says it has killed at least 130 Gaza militants since it launched its ground offensive Saturday. Ten Israelis have been killed since the fighting began, including three civilians.
On Wednesday, 29 Palestinians were killed, including at least 22 civilians and two Islamic Jihad militants, medics said. In one incident, a family of four was killed in an airstrike on their car, medics said.
In the Jebaliya refugee camp, there was a mass funeral for 40 people killed Tuesday by Israeli mortar fire toward a U.N. school. Israel said it was responding to an attack by Hamas militants who fired mortar shells from an area near the school.
The bodies, wrapped in blankets, were laid out in a long row on the ground, with mourners kneeling in prayer before them.
Israel carried out 40 airstrikes Wednesday on targets including smuggling tunnels on the Gaza-Egypt border, Israel's chief army spokesman Brig. Gen. Avi Benayahu said.
An Israeli combat officer, identified as Lt. Col. Amir, said troops neutralized hundreds of explosives devices, including booby-trapped houses.
Residents said 16 houses on the border were destroyed, with Israel presumably targeting buildings shielding tunnel entrances. Hamas had about 300 smuggling tunnels in the area before the offensive, and Israel has already destroyed dozens in repeated strikes.
Fida Kishta, an area resident, said she could hear sporadic shelling from F-16 planes.
"I feel like the ground is shaking when we hear the shelling. People are terrified," Kishta said.
In the evening, an Israeli warplane dropped leaflets over the Rafah refugee camp on the Gaza-Egypt border, urging residents to flee because of planned Israel strikes. Hamas has weapons smuggling tunnels in the area, and Israel has already destroyed dozens of them in airstrikes.
"Because Hamas uses your houses to hide and smuggle military weapons, the IDF will attack the area, between the Egyptian border until the beach road," the leaflet said, according a local U.N. official.
After the leaflets were dropped, about 5,000 fled to two U.N. schools turned into temporary shelters.
Despite the army's push, Gaza militants fired 14 rockets Wednesday, including hits on the cities of Beersheba and Ashkelon.
Rocket fire has fallen off somewhat as Israeli troops tighten their hold on Gaza, taking over open areas used to launch rockets, but Gaza residents say militants are still launching from heavily populated areas.
The army spokesman said 120 suspected militants have been captured.
"We uncovered many tunnels for kidnapping soldiers, at least one car bomb, booby trapped dolls, tunnels - an underground city," Benyahu told Israel TV's Channel 10.
With the renewed fighting, a truce deal still seemed distant. There are also wide gaps between the demands raised by Israel and Hamas.
Still, Israel was to send an envoy, senior Defense Ministry official Amos Gilad, to Cairo on Thursday to hear more about the French-Egyptian truce proposal, whose terms still remain unclear.
The plan calls for an immediate cease-fire for a limited period to allow humanitarian aid into Gaza. It also calls for an urgent meeting of Israel and the Palestinian side on arrangements to prevent any repetition of military action and to deal with the causes.
In Paris, French President Nicolas Sarkozy said Israel and the moderate Palestinian Authority, Hamas' rival, accepted the plan. However, the Palestinian Authority is not a direct party to the conflict.
In Syria, a spokesman for Hamas leader Khaled Mashaal told CBS News' George Baghdadi soon after Sarkozy's comments were made public that the militant group did not accept the terms of the Egyptian-French plan.
Spokesman Abu Omar said Hamas could only agree to a plan which guaranteed to end the economic blockade and to reopen the border crossings as soon as hostilities on both sides were halted; what he called a "complete package."
The Egyptian plan calls for Hamas to stop firing rockets and Israel to stop its military campaign simultaneously - which Hamas is amenable to - but it then states both sides should sit down to discuss further measures to be taken, such as the border crossings and the blockade.
Israel has no direct contacts with Hamas, but Mashaal indicated earlier Wednesday for the first time an apparent willingness to "contribute in reaching a solution to stop the aggression in Gaza." (Click here to read more on this from George Baghdadi in the World Watch blog.)
Turkey has already been asked to put together an international force in Gaza, according to a Mideastern diplomat familiar with the country's efforts to end the conflict. He said the responsibilities of the force were yet to be determined. The diplomat spoke on condition of anonymity because of the sensitivity of the information, and Turkish officials would not immediately comment.
Hamas and Israel voiced reservations, and the Bush administration also withheld firm backing. "What we are seeking is a cease-fire that would actually last," said White House press secretary Dana Perino.
At a news conference, President-elect Barack Obama deferred to President Bush on the Gaza conflict. Obama has insisted that he would allow the current chief executive to deal with foreign policy matters until the Jan. 20 inauguration.
"We can't have two administrations running foreign policy at the same time. We simply can't do it," Obama said. "The silence is not as a consequence of a lack of concern. In fact, it's not silence. ... I've explained very clearly what institutional constraints I'm under when it comes to this issue."
Israel briefly suspended its offensive to allow humanitarian supplies to reach Gaza, and officials said such lulls would be declared on a regular basis, depending on security.
However, just getting aid into Gaza won't solve the huge humanitarian problems. Roads are bombed and blocked, reports CBS News correspondent Richard Roth and it's still a battle zone full of hazards for people delivering the aid and the people who need it.
The pause in fighting came amid growing warnings by the World Bank and aid groups of a humanitarian crisis. The World Bank said there is a severe shortage of drinking water and that the sewage system is under growing strain.
During the lull, Israel allowed in 80 trucks of supplies from various donors as well as industrial fuel for Gaza's power plant. Medics tried to retrieve bodies in areas that had previously been too dangerous to approach.
Medic Mohammed Azayzeh in central Gaza pulled out three people, killed by shrapnel fire Sunday, from the border town of Mughraqa, where Israeli tanks had settled nearby. The medic said he also found a dead family of three, including a father cradling a 1-year-old boy.
Ambulance sirens wailed as drivers rushed to the border crossing with Egypt to evacuate the wounded during relative drop in violence.
Despite the new cease-fire efforts, Israel's security Cabinet decided to push ahead with the offensive, according to participants who spoke on condition of anonymity because they are not allowed to discuss the content of such meetings.
The military has called up thousands of reserve troops that it could use to expand the offensive, supporting the three brigade-size formations of regular troops now inside.
Defense officials said the troops could be ready for action by Friday. They spoke on condition of anonymity because the army's preparations are classified.
Osama Hamdan, a Hamas representative in Lebanon close to the group's leadership in Syria, told Al-Jazeera television that Hamas will reject any initiative that does not include the withdrawal of the Israeli army from Gaza and the opening of all of the territory's border crossings.
"Any proposal that does not include these bases is unacceptable," he said. "The idea of an international force is rejected and such forces which will come to Gaza to protect Israel will be dealt with as enemy forces."