Palestinian officials say that 425 people in Gaza have been killed since Israel launched its operation. Photo: BBC

Palestinian President Mahmoud Abbas said the deaths at Shejaiya, east of Gaza City, were a "massacre". Witnesses spoke of bodies lying in the streets.

A humanitarian truce was agreed in the area, but lasted less than an hour.

Israel earlier said it had expanded its operation - launched 13 days ago - against Hamas militants.

The ceasefire was meant to last from 13:30 to 15:30 local time (10:30-12:30 GMT), according to an Israeli military spokesman.

But a BBC team on the ground reported an exchange of fire less than an hour after the truce began.

Both sides blamed the other for violating the truce.

The death toll rose sharply over the weekend, with the number of Palestinians killed more than 425 since the operation began, according to Palestinian health officials.

At least 27 Palestinians were killed outside Shejaiya on Sunday, they added, with the number of wounded from the operation now standing at more than 3,000.

Paramedics said that rescue workers have so far not been able to get to East Shejaiya, an area very close to the Israeli border, which has seen heavy shelling. The death toll is expected to rise.

The majority of those killed are civilians, the UN says.

In other developments:

• Hamas claims it carried out a major attack on Israeli forces in Gaza, causing multiple casualties. There has been no comment from the Israeli military on this
• The Israeli military said it "neutralised" two militants who "emerged from a tunnel" in southern Gaza, with no harm to Israeli troops
• UN Secretary General Ban Ki-moon is due to arrive in Qatar later to meet Mr Abbas
• Hamas is continuing to fire rockets into Israel, with one landing in the city of Ashkelon

The district of Shejaiya came under heavy Israeli bombardment overnight, Palestinians say

The Israeli military says the ground offensive has been expanded to destroy a Hamas tunnel network

Scenes of panic

At least 60 people died in the north-eastern district of Shejaiya in a heavy bombardment which began overnight, Palestinian sources said.

Ambulances were unable to reach much of the area because of shelling in the area, about three kilometres (1.2 miles) away from Gaza City.

The BBC's Yolande Knell, in Gaza City, says there have been scenes of panic with thousands of residents fleeing the area.

At the scene: Paul Adams in Shejaiya

When we arrived at the edge of the neighbourhood, Palestinians were still fleeing in their hundreds: carrying nothing but their children, some pausing to vent their anger in front of cameras.

They spoke of bodies lying in the street and the wreckage of buildings, including a mosque.

After a night of ferocious bombardment, they seem traumatised and stunned. For three days, Israel had warned them to leave their homes, but Shejaiya is home to 80,000 people. Most stayed put, not expecting the ferocity of last night's bombardment.

One man, his eyes glassy, said his father had been killed. He didn't know where other family members were or even if they were alive.

An elderly woman, in traditional Palestinian costume, raised her arms to the sky and asked how God could let this happen.

A handicapped girl winced as she was lifted into the back of a pickup truck.

And all the time, more and more civilians emerged from Shejaiya.

Five Israeli soldiers and two Israeli civilians have died since Prime Minister Benjamin Netanyahu launched the military offensive on 8 July.

The Israel Defense Forces (IDF) sent ground troops into Gaza on Thursday after days of heavy air and naval barrages failed to stop rocket fire from Gaza.

'Restoring security'

Israel says the operation is necessary to target Hamas tunnel networks, which it says it could not do from the air alone.

Lt Col Peter Lerner, an IDF spokesman, said the offensive was being expanded "to restore security and stability to Israel's residents and citizens".

An air strike early on Sunday morning killed four people, including two children, according to medics

Israelis who support the offensive faced off with those against it in Tel Aviv on Saturday evening

Meanwhile, the UN warned it was running out of supplies to help more than 50,000 Palestinians who have sought shelter at its schools in Gaza.

A UN official said the number of people fleeing was much higher than expected, with both the Israeli and Egyptian borders closed to Gazans.

Qatar is expected to host a meeting between President Abbas and Ban Ki-moon on Sunday before the UN chief continues on to Kuwait, Egypt, Israel, the Palestinian Territories and Jordan.

Mr Abbas is also due to meet Hamas leader Khaled Meshaal.

Hamas rejected an Egypt-brokered ceasefire last week, saying any deal with Israel must include an end to a blockade of Gaza.