Hospital officials say seven people died when an Israeli tank fired a shell into a Gaza Strip refugee camp.
They say at least seven others were seriously wounded.
Israeli troops moved into Bourrej refugee camp this morning, backed by army helicopters.
The army says it is conducting a targeted operation and that it will check the report.
Inside the camp an intense gun battle broke out between Israeli troops and Palestinian gunmen.
Kamal Baghdadi, the mayor of Bourrej refugee camp, says a tank shell was fired at a building belonging to the Mansour family, adding that wounded are still being evacuated from the area.
Hassan Safi, 49, said he was 300 yards away in his home when the missile hit.
He said: "I rushed with my sons to the place which was all destroyed, I myself took out two people, the helicopter was firing with machine guns at us, making it difficult to move."
The army has knocked out the electricity source for the camp and ambulances are having difficulty reaching the area.
Witnesses say the army had surrounded the home of Jamal Ismail, 21, a suicide bomber who blew himself up along with another man last month, in an explosive-packed boat off the Gaza Strip last month.