Flares and assault helicopters were seen in the skies above the blacked-out area, where Hamas said it set ablaze seven Israeli tanks killing and capturing several Israeli soldiers.
According to the Islamic republic news agency, Palestinian medical officials said 29 civilians died on Monday, including 13 members of a family hit by an Israeli strike on their home in a Gaza refugee camp.
Eleven members of the extended Samouni family were killed and 26 wounded, according to witnesses and hospital officials, with five children age 4 and under among the dead.
Hundreds of members of the clan flooded in to Shifa Hospital, all from Zeitoun, many in shock. Masouda al-Samouni, 20, lost her mother-in-law, her husband and her 10-month-old son.
She said she had been preparing food for the baby when the missile struck.
"He died hungry," she said.
In the crowded Shati refugee camp, near the coast, another family was wiped out early Monday when a shell fired from a navy ship hit their house while they slept.
In the Tuffah district, another poor neighborhood of Gaza City, the Israelis fired tank shells into a house, witnesses said.
A neighbor drove Mumin Alawi, 13, to the hospital. When Muhammad Alawi, Mumin's father, came looking for his son and found that the boy had died, he was beside himself and wanted to jump from a balcony, until relatives held him back.
"He died a martyr," said Muhammad's mother. "At least this body is whole."
A Red Cross official in Gaza said there had been many cries for help. In the case of the Samouni family, she said, the organization was told by the Israelis that it would be too dangerous to go into the Zeitoun neighborhood.