An Israeli strike on a Gaza humanitarian safe zone killed at least 40 people and wounded 60 others on Tuesday morning, according to Palestinian officials.
Israel said it targeted "significant" Hamas militants, allegations denied by the terror group.
The Gaza Civil Defense said it had recovered 40 bodies from the strike in a designated humanitarian zone known as Al-Mawasi and was still looking for people.
It said entire families had been killed as they huddled in tents.
Local residents said three strikes hit the shelters for displaced people causing seven metre-deep craters.First responders and displaced people were sifting through the sand and rubble with garden tools and their bare hands by the light of mobile phones after the pre-dawn strike.
The Nasser Hospital in Khan Younis, one of three hospitals to receive casualties, said around two dozen bodies had been brought in from the strike.
The Israeli military claimed it had struck Hamas militants who were operating in a command-and-control centre, using precise munitions, aerial surveillance and other means to avoid civilian casualties.
Israel, which says it has tried to avoid harming civilians, blamed Hamas for their deaths, alleging militants often operate in residential areas and are known to position tunnels, rocket launchers and other infrastructure near homes, schools and mosques.
Hamas released a statement denying any militants were in the area.
The war has displaced around 90% of Gaza's population of 2.3 million.
Israeli evacuation orders, which now cover around 90% of the territory, have pushed hundreds of thousands of people into Mawasi, a sprawling line of tent camps along the coast.
Israel has occasionally struck targets there despite designating it as a humanitarian zone.
Gaza's Health Ministry says more than 40,000 Palestinians have been killed in Gaza since the war began. It does not differentiate between fighters and civilians in its count.
Hamas-led terrorists killed some 1,200 people, mostly civilians, in their October 7 attack which sparked the war.
They abducted another 250 people and are still holding around 100 after releasing most of the rest in exchange for Palestinians imprisoned by Israel during a weeklong cease-fire last November.
Around a third of the remaining hostages are believed to be dead.
