Israel says its top defence envoy will travel to Egypt this week for "decisive" talks with Hamas, which will determine whether it will ramp up its Gaza offensive or move towards a ceasefire.
The comments, made by military officials on condition of anonymity, came as Israeli Defence Forces closed in on Gaza City's crowded core late Tuesday and clashed with Palestinian militants in a series of close-range street battles.
Amid mounting civilian casualties and growing international concern, Israeli Defence negotiator Amos Gilad will go to Egypt on Thursday, renewing hopes for a diplomatic end to the offensive.
The trip had been postponed for several days as the IDF pounded targets in the Gaza Strip and Hamas continued to fire a barrage of salvos into southern Israel.
UN Secretary General was expected to arrive in the region Wednesday as part of a reinvigorated drive for a diplomatic solution to the war. Egyptian envoys, meanwhile, have continued to pressure Hamas into accepting a ceasefire.
As Israeli tanks and troops lurched deeper into Gaza City, some locals were forced to flee their homes and take cover as a steady bombardment destroyed buildings.
The IDF has now nearly surrounded Gaza City, which is a dense and crowded city of about 400,000. However, Israel's Defence Minister Ehud Barak said Israel had "probably not" achieved all of its war aims.
Israel has said that the ground invasion and air assault on Gaza will continue until Hamas ceases all rocket fire and pledges to end weapons smuggling into the area. Hamas has pledged to fight on until Israel pulls out of Gaza.
Gaza City's suburbs
The Israeli incursion into the Tel Hawwa area Tuesday, which is on the southeastern edge of Gaza City, marks the farthest point Israel has reached since the beginning of its offensive, which has last for more than two weeks.
According to The Associated Press, several high-rise buildings were on fire in Tel Hawwa, including a lumberyard.
Khader Mussa, a resident in Tel Hawwa, said he fled his house waving a white flag. He spent the night in the basement of a relative's house, alongside his pregnant wife and parents.
"Thank God we survived this time and got out alive from here. But we don't know how long we'll be safe in my brother's home," Mussa, 35, told AP by telephone.
Haaretz, an Israeli daily, is reporting that some Hamas suicide bombers are dressing up as Israeli soldiers and trying to penetrate battle lines to blow themselves up next to Israeli troops.
So far, Palestinian hospital officials say more than 940 Palestinians, half of them civilians, have been killed in fighting since the campaign began.
Palestinian medical officials report at least 21 people were killed in fighting Tuesday, although Israel says the death toll could be much higher.
According to Michele Dunn, an analyst at the Carnegie Endowment for International Peace, the inauguration of Barack Obama on January 20 means Israel will likely slow their offensive over the next week.
The political calendar in Israel will also force a military slowdown, as the nation is set to hold parliamentary elections on February 10th, Dunn told Â鶹´«Ã½net.
But Dunn added that Israel will likely keep a military presence in Gaza.
"I'm not sure that means Israeli troops will withdraw from Gaza," she said, noting that Israel's leaders will want an agreement in place that will prevent Hamas from rearming.
With files from The Associated Press
