Israeli forces control Gaza City's eastern suburbs and in recent days have been pounding the Sheikh Radwan and Tel al-Hawa areas, from where they would be positioned to advance on central and western areas where most of the population is sheltering.
"We are scared but what can we do?" said Bassam Al-Qanou, a displaced man sheltering with about 30 family members in one of countless ragged improvised tent camps along the city's beach.
He said the family had no way to get out and nowhere to go.
At least 85 Palestinians have been killed by Israeli strikes or gunfire across the Gaza Strip in the past 24 hours, most in Gaza City, according to the territory's health ministry.
The Israeli military said four of its personnel had been killed during combat in the south of the strip.
A total of 48 hostages remain in the Gaza Strip since their capture in a Hamas attack on southern Israel on October 7, 2023.
Israeli officials say about 20 are still alive.
In separate developments, Israel attacked Hezbollah military targets in southern Lebanon while two Israelis were killed at Allenby Crossing between the Israeli-occupied West Bank and Jordan in what the Israeli military called a terror attack.
Israeli army spokesman Nadav Shoshani said Israeli forces had been operating in the periphery of Gaza City for several weeks but since the night of Monday to Tuesday large numbers of troops had begun moving towards the inner city.
He told Reuters on the Israeli side of the border with the Gaza Strip that a combination of infantry, tanks and artillery was advancing, backed up by the air force, and that it was a gradual process that would increase as time went on.
Families of the Israeli hostages have been imploring Prime Minister Benjamin Netanyahu to stop the offensive and instead negotiate a ceasefire with Hamas to free their loved ones.
The armed wing of Hamas said on Thursday the hostages were distributed throughout the neighbourhoods of Gaza City.
"The start of this criminal operation and its expansion means you will not receive any captive, alive or dead," it said in a written statement.
But Israel Katz, Israel's defence minister, said on X: "If Hamas does not release the hostages and disarm, Gaza will be destroyed and turned into a monument to the rapists and murderers of Hamas."
The Palestinian Telecommunications Company said in a statement that its services had been cut off "due to the ongoing aggression and the targeting of the main network routes".
By nightfall, it said it had reactivated fixed internet and landline services.
Several Palestinians said internet and phone services began to come back in Gaza City.
"The disconnection of internet and phone services is a bad omen. It has always been a bad signal something very brutal is going to happen," said Ismail, who only gave one name.
He was using an e-SIM to connect his phone, a dangerous method as it requires seeking higher ground to receive a signal.
Hundreds of thousands of Palestinians have fled Gaza City since Israel announced on August 10 it intended to take control but a greater number are staying put, either in battered homes among the ruins or in makeshift tent encampments.
Effie Defrin, another Israeli military spokesman, said an estimated 450,000 people from Gaza City had moved southward.
The military has been dropping leaflets urging residents to flee towards a designated "humanitarian zone" in the south of the territory but aid agencies say conditions there are dire, with insufficient food, medicine, shelter and basic hygiene.
