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It was the bloodiest day so far of the Israeli offensive in Gaza.
At least 87 Palestinians were reported killed along with 13 Israeli soldiers.
The death toll started to rise a soon as a humanitarian truce ended.
Most of the deaths came in the Shijaiya district.
Israel’s army said it had been targeting militants from Gaza’s Hamas group whom it alleges has been firing rockets from the area and where they have built tunnels and command centres.
The Israeli army deaths amount to the military’s biggest one-day loss for years. It brings the number of Israeli soldiers killed in the current offensive to 18. Hamas also claims to have captured one soldier.
Israel says it has had no choice but to enter the densely populated area and had warned the locals to leave. The Palestinians accuse Israel of carrying out a massacre.