Israeli forces pounded Rafah and other areas across the Gaza Strip and engaged in close-quarter combat with fighters led by Palestinian Islamist group Hamas.
Residents said the Israelis appeared to by trying to complete their capture of Rafah, the city on the enclave's southern edge that has been the focus of an Israeli assault since early May.
Tanks were forcing their way into the western and northern parts of the city, having already captured the east, south and centre. Israeli forces fired from planes, tanks and ships off the coast, forcing a new wave of displacement from the city, which had been sheltering more than a million displaced people, most of whom have been forced to flee again.
The Israeli military said on Friday its forces were conducting "precise, intelligence-based" actions in the Rafah area, where troops were involved in close-quarter combat and had located tunnels used by militants. It also reported actions elsewhere in the enclave.
Some Rafah residents said the pace of the Israeli raid has been accelerated in the past two days. They said sounds of explosions and gunfire indicating fierce fighting have been almost non-stop.
More than eight months into the war in Gaza, Israel's advance is now focused on the two last areas its forces had yet to storm: Rafah on Gaza's southern edge and the area surrounding Deir al-Balah in the centre.
"The entire city of Rafah is an area of Israeli military operations," Ahmed Al-Sofi, the mayor of Rafah, said in a statement carried by Hamas media on Friday.
The military accused Hamas of using Palestinian civilians as human shields.
"The soldiers located inside a civilian residence large quantities of weapons hidden in wardrobes, including grenades, explosives, a launcher and anti-tank missiles, ammunition, and arms," the military said in a statement late on Thursday.
Reporting and writing by Nidal al-Mughrabi