It was the deadliest day since Israel's withdrawal from Gaza in the summer of 2005.
At least 13 civilians, seven of them women, were among the dead and more than 150 people were wounded, several of them critically, said Dr Muawiya Hassanein, the head of Gaza emergency services.
Israeli tanks supported by helicopters moved into the area in and around the crowded town and refugee camp of Jabaliya and nearby Tufah in northern Gaza just after midnight on Friday, witnesses said.
By midday troops had pushed nearly three kilometres (two miles) inside the Gaza Strip and were locked in an intense firefight, according to witnesses.
Two Israeli soldiers were killed on Saturday in Gaza, and another seven soldiers, including one officer, were wounded, the Israeli army said.
The urban battlefields were littered with debris as frightened Gazan residents hid inside their homes.
"We hear the rockets and the explosions everywhere... we cannot leave our homes," Jabaliya resident Abu Alaa, 40, said by telephone as he and his children took cover. "They're shooting at everything that moves."
The latest operation raised the death toll to more than 80 since the level of violence escalated on Wednesday.
Robert Serry, the UN special coordinator for the Middle East peace process, called for an end to the violence, said his spokesman Richard Miron.
Serry "called for an immediate cessation of rocket fire at Israeli civilians and reminded the IDF (Israeli army) that it must comply with international humanitarian law and not endanger civilians," Miron said.
Elsewhere in Jabaliya news photographers were hemmed in by the fighting and came under Israeli fire, an AFP photographer trapped with them said.
A Palestinian photographer for the local Media Group was lightly wounded when an Israeli shell exploded, an official with the agency said.
The dead include at least four children, medics said, including a 12-year-old girl and her 11-year-old brother, who relatives said were killed by shrapnel as they slept.
Christopher Gunness, a spokesman for the UN agency for refugees (UNRWA), called "for an immediate ceasefire and political negotiations to end the fighting, which is impeding our humanitarian work.
"Those on both sides responsible for the killing of civilians must be held accountable," he said.
In the West Bank city of Ramallah about 300 Palestinians from all the major political factions marched through the streets, carrying pictures of children killed in recent Israeli strikes and banners slamming recent military assaults.
At least 12 fighters were killed in Saturday's operation, 10 of them from the Hamas resistance movement.
Hamas supremo Khaled Meshaal accused Israel of "using the Holocaust" as a pretext for launching attacks on the Gaza Strip.
"Israel is using the Holocaust as a cover to do what it wants," Meshaal told a news conference in the Syrian capital, where he lives in exile.
Meshaal condemned Israel's air and overland raids on Gaza that have killed dozens of people since Wednesday as "a real holocaust."
"If the world cannot end the occupation... then it is our right to defend ourselves," he said. "When the battle is imposed on us, the only thing left is resistance."
He also warned Israel that "if you decide to occupy Gaza, 1.5 million people will fight you with faith and determination", referring to the entire Palestinian population of the impoverished territory.
An angry Meshaal also criticised the international community for failing to stop the Israeli attacks. "Those who keep quiet on Israeli crimes are partners in these crimes," he said.
Palestinian president Mahmud Abbas denounced the Israeli assault as "more than a holocaust."
"It's very regrettable that what is happening is more than a holocaust. We tell the world to see with its own eyes and judge for itself what is happening," he told reporters in Ramallah.
Abbas appeared to be referring to comments on Friday by Vilnai, who used the Hebrew word "shoah" -- generally used only for the Nazi Holocaust -- in remarks to army radio.
Vilnai had told Army Radio: "The more Qassam fire intensifies and the rockets reach a longer range, they will bring upon themselves a bigger 'shoah' [Holocaust] because we will use all our might to defend ourselves."
The word "shoah" is rarely used in Israel beyond discussions of the Nazi Holocaust of the Jews but government spokesmen said Vilnai had employed the word only to mean "disaster."
Hamas PM Ismail Haniyeh said: The Israelis "want the world to condemn what they call the Holocaust and now they are threatening our people with a holocaust."
Palestinian fighters say that armed resistance is the only way that would force Israel to end its long and illegal occupation of Palestinian territories (Gaza, the West Bank, and Arab east Jerusalem). Hamas had also repeatedly called for a long-term true with Israel, but Tel Aviv declines to accept any mutual ceasefire.
Güncelleme Tarihi: 02 Mart 2008, 11:49