Israel reoccupies north Gaza as deadly Mideast crisis soars

Israeli tanks and troops have thrust deeper into Gaza, killing six Palestinians and occupying three former Jewish settlements in their biggest offensive since leaving the territory last year.

Helicopter gunships and artillery pounded the territory, as troops moved further into both the northern and southern Gaza Strip, coming under heavy fire after a ninth consecutive night of air strikes and artillery assault.

The push effectively created a buffer zone in the north of the Palestinian territory and followed a second rocket attack on the southern Israeli city of Ashkelon in as many nights that nevertheless caused no casualties.

Palestinian prime minister Ismail Haniya, whose Hamas-led government has been directly targeted in the offensive, slammed the assault as "collective punishment" on his people and demanded an international intervention.

Thursday's two-pronged onslaught, met by terrified Palestinians fleeing residential areas with babies and belongings, came amid continued efforts to secure the release of a soldier abducted by Palestinian militants on June 25.

"If you return Gilad Shalit home safe and sound and if you stop your rocket attacks, we will withdraw our forces (from the Gaza Strip)," Defence Minister Amir Peretz said in comments addressed to the Palestinians on army radio.

In northern Gaza, ground forces, armoured vehicles and sappers advanced up to five kilometres (three miles) in a bid to expand a unilaterally declared interdiction zone aimed at preventing the incessant rocket attacks on Israel.

Further Israeli troops massed outside the towns of Beit Hanun and Beit Lahiya, in the deepest Israeli ground operation since the 19-year-old Shalit was captured 11 days ago, sparking the worst Middle East crisis in months.

A 20-year-old civilian was killed by machine-gun fire from an Israeli tank in the Beit Lahiya, where Palestinian gunmen put up a heavy fight in a neighbourhood partially reoccupied by Israeli soldiers at dawn.

Two members of the armed wing of the governing Palestinian movement Hamas -- which claimed responsibility for Shalit's abduction -- and a policeman were killed earlier in helicopter raids and tank shelling.

Trucks and infantry took over the remains of Dugit, Elei Sinai and Nissanit settlements, razed last year as part of Israel's historic pullout from the territory that had meant to draw the curtain on a 38-year occupation.

In the south, two Palestinians were killed and five others wounded in an Israeli air strike after ground forces came under fire from at least eight rockets. The army said the raid targeted an "anti-tank cell".

Ground forces and engineers were operating two kilometres (one mile) into the south, on a mission to uncover tunnels and explosives, the army said.

Dozens of Palestinian families, fearing for their lives faced with the ominous sight of approaching Israeli armour, fled their homes at dawn.

Women clutching babies and a few belongings scurried away on foot toward a line of waiting taxis amid the boom of gunfire.

"We woke up and the tanks were right there. There were fighters in our garden. We had to flee to protect the children," said one father, rushing away from a Beit Lahiya neighbourhood with his wife and four children.

Palestinian officials and residents believe Israel is using the soldier's capture as an excuse to try to topple the Hamas government sworn in last March.

"There is no motivation to stay there. We have no interest in returning. We have a simple interest to prevent the continuation of firing at our communities," insisted Israel's Infrastructure Minister Benjamin Ben-Eliezer.

But Tzahi Hanegbi, chairman of the parliament's defence and foreign affairs committee, did not rule out the possibility of a long-term presence, saying "it could also be years" if rocket attacks continued.

An unprecedented Hamas rocket attack Tuesday on central Ashkelon smashed into a school, causing extensive damage and leading Israel's security cabinet to order the military to step up its offensive and section off parts of Gaza.

Prime Minister Ehud Olmert himself warned that the attack on Ashkelon would have "far-reaching consequences" to be felt first by Hamas.

Israel has already carried out an air strike against the Gaza offices of both the Hamas premier and interior minister, arrested a third of the cabinet in the occupied West Bank and raided multiple militant targets in its offensive.

In Washington, US Secretary of State Condoleezza Rice called on Israelis and Palestinians to exercise restraint but said it was "high time" for Hamas to return the abducted soldier.

UN Secretary General Kofi Annan, terming the situation "dangerous" and potentially "explosive", also urged both sides "to step back from the brink".

But repeated international calls for restraint have largely fallen on deaf ears in what has become the worst Middle East crisis since Hamas came to power in March and Olmert formally took the helm in May.

Israel has vowed to unleash its full military might on Gaza, while Hamas' armed wing has warned of a "new era of violence" against the Jewish state.

Israel says Shalit is still alive but has flatly ruled out negotiations with militants and promised to strike anyone linked to them, in a thinly-veiled reference to Syria.

The offensive has sparked concerns of a humanitarian fall-out with the 1.4 million residents of the largely impoverished Gaza already grappling with food shortages, fuel and power cuts.