Israeli forces sharply stepped up an offensive against Palestinian militants in Gaza yesterday, fighting running battles with gunmen and killing 12 people in the worst violence since the cross-border operation began.

Gunmen also killed a soldier in northern Gaza, where clashes raged, Al-Jazeera television said. The army had no comment.

Israeli Prime Minister Ehud Olmert ordered tanks to push deeper into Gaza overnight after militants from the ruling Hamas movement fired rockets into a major Israeli city for the first time.

The incursion nearly a year since Israel quit Gaza after 38 years of occupation expands an offensive that began last week with the main goal of bringing home a captured soldier.

Among the deadliest attacks, an Israeli air strike near the town of Beit Lahiya in northern Gaza killed five Palestinians, witnesses and medics said.

The army said it was checking the report.

Beit Lahiya was also scene of the heaviest ground fighting, with gunmen from various factions firing anti-tank rockets at Israeli troops backed by tanks and helicopter gunships.

An Israeli tank shell killed two militants near Beit Lahiya, the Hamas armed wing said. Tank fire also killed one civilian, the victim's family said.

Medics said around 30 Palestinians were wounded.

The army said three soldiers were hurt, one seriously.

It also denied tanks were inside Beit Lahiya and said ground troops were doing most of the fighting.

Beit Lahiya's streets were largely deserted as frightened residents sheltered indoors.

"Israeli tanks are outside our house. Children are screaming and the house is shaking. We are caught in the crossfire," one woman told a local radio station.

Air strikes near the southern town of Khan Younis killed a civilian and a militant, witnesses said. An army spokeswoman said aircraft had targeted militants who fired seven anti-tank missiles at Israeli forces. She said the dead were militants.

Israeli Defence Minister Amir Peretz said that although Israel quit Gaza last year, "no one should see that as a guarantee that we cannot reach territory in which we feel we have no choice but to operate".

"We have no intention of sinking into the Gaza swamp," he added.

Source: China Daily