Israel has dropped leaflets on the Gaza strip warning residents of plans to escalate its military action.

At least 40 Hamas targets were attacked on Saturday, including suspected rocket sites and tunnels used by militants.

The leaflets urged Gaza residents not to help Hamas and to stay away from its members.

But there was no immediate sign of an escalation, though earlier in the day, witnesses said Israeli troops moved to within one mile (1.6 kilometres) of Gaza City before pulling back slightly.

The Israeli threat to launch a "new phase" in its two-week-old offensive - that has already killed more than 800 Palestinians - came in defiance of international calls for a ceasefire to allow aid in the country.

Meanwhile, Hamas fighters launched 15 rockets at southern Israel on Saturday in a daily ritual that has severely disrupted life for hundreds of thousands of Israeli civilians. Three Israelis were injured in the city of Ashkelon.

One of the bloodiest days of continued violence comes as rival Palestinian groups converged on Cairo for discussions about an Egyptian ceasefire initiative.

Egypt negotiated the last ceasefire between Hamas and Israel but it is believed the latest conflict has further strained the difficult relationship between Cairo and Hamas.

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