Most of the casualties were security forces, but Palestinian officials said at least 15 civilians were among the dead. More than 400 people were also wounded.
The unprecedented assault sparked protests and condemnations throughout the Arab world, and many of Israel's Western allies urged restraint, though the U.S. blamed Hamas for the fighting.
President Bush was briefed on the situation in Israel and Gaza during his daily intelligence briefing, reports CBS News White House correspondent Mark Knoller. Mr. Bush also spoke by phone to Secretary of State Condoleezza Rice to discuss the Middle East.
Presidenent-elect Barack Obama, vacationing in Hawaii, was also briefed and is monitoring the situation closely, CBS News correspondent Jaime Farnsworth reports.
An Obama transition aide said that Mr. Obama also spoke with Rice and was in touch with the White House.
There was no end in sight to the fighting. The first round of strikes began around noon Saturday followed by successive waves of attacks that continued into the early hours Sunday.
Israel warned it might go after Hamas' leaders, and militants kept pelting Israel with rockets killing at least one Israeli and wounding six.
Hundreds of Israeli infantry and armored corps troops headed for the Gaza border in preparation for a possible ground invasion, military officials said, speaking on condition of anonymity under army guidelines.
Israeli Defense Minister Ehud Barak said in an interview with the CBS Evening News that "if the goals of the operation will not be achieved by airstrike, we will have to consider boots on the ground."
He said those goals were "To change totally the behavior of Hamas. It's a terrorist regime that keeps shelling Israel with thousands of rockets and mortar shells over our civilian population indiscriminately."
Asked if Israel's response to Hamas' rocket fire might be considered disproportionate, Barak told the Evening News, "We are trying to avoid damage, but we have to achieve our goals."
Prime Minister Ehud Olmert said late Saturday that the goal was "to bring about a fundamental improvement in the security situation." He added, "It could take some time."
The Israeli airstrikes caused widespread panic and confusion, and black plumes of smoke billowed above the territory, ruled by the Islamic militant Hamas for the past 18 months. Some of the Israeli missiles struck in densely populated areas as students were leaving school, and women rushed into the streets frantically looking for their children.
"My son is gone, my son is gone," wailed Said Masri, a 57-year-old shopkeeper, as he sat in the middle of a Gaza City street, slapping his face and covering his head with dust from a bombed-out security compound nearby.
He said he had sent his 9-year-old son out to purchase cigarettes minutes before the airstrikes began and could not find him. "May I burn like the cigarettes, may Israel burn," Masri moaned.
Left: An explosion is seen in an Israeli missile strike in the northern Gaza Strip near the border with Israel, Dec. 27, 2008.
(AP Photo/Sebastian Scheiner )
Militants often operate against Israel from civilian areas. Late Saturday, thousands of Gazans received Arabic-language cell-phone messages from the Israeli military, urging them to leave homes where militants might have stashed weapons.
The offensive began eight days after a six-month truce between Israel and the militants expired. The Israeli army says Palestinian militants have fired some 300 rockets and mortars at Israeli targets over the past week, and 10 times that number over the past year.
"There is a time for calm and there is a time for fighting, and now is the time for fighting," said Israeli Defense Minister Ehud Barak, vowing to expand the operation if necessary.
In Gaza City's main security compound, bodies of more than a dozen uniformed Hamas police lay on the ground. Civilians rushed wounded people in cars and vans to hospitals because there weren't enough ambulances to transport all the dead and wounded.
"There are heads without bodies .... There's blood in the corridors. People are weeping, women are crying, doctors are shouting, " said nurse Ahmed Abdel Salaam from Shifa Hospital, Gaza's main treatment center.
Military officials said aircraft released more than 100 tons of bombs in the first nine hours of fighting, focusing initially on militant training camps, rocket-manufacturing facilities and weapons warehouses that had been identified in advance.
A second wave was directed at squads who fired about 180 rockets and mortars at Israeli border communities. Palestinians said Israeli bombs destroyed a mosque early Sunday. The military called it a "base for terrorist activities."
Another target early Sunday was the Al Aqsa TV station used by Hamas. Its studio building was destroyed, but the station remained on the air with a mobile unit. Palestinians counted about 20 airstrikes in the first hours of Sunday.
Israeli Foreign Minister Tzipi Livni said Hamas' political leaders could soon be targeted. ""Hamas is a terrorist organization and nobody is immune," she declared.
The campaign was launched six weeks before national elections. Livni and Barak hope to succeed Ehud Olmert as prime minister, and the outgoing government has faced pressure to take tough action.