At least 106 Palestinians and one Israeli soldier have now been killed in the territory since Israel stepped up its operation in a bid to retrieve a missing soldier and stopping militant rocket fire.
Israeli troops rolled back into the territory on June 28 trying to retrieve Corporal Gilad Shalit, whose capture on June 25 sparked the worst Israeli-Palestinian crisis in months.
On Friday UN Secretary General Kofi Annan renewed calls for an end to the "disproportionate" violence.
Israel has ignored repeated international calls for restraint, and the latest Palestinians to die, a militant from the armed wing of the governing Hamas, and his family, were killed when tank fire hit their home.
Palestinian prime minister Ismail Haniya, the leader of the Hamas-led government, warned Arabs and Palestinians were at "strategic risk" from Israel's parallel offensives in Gaza and Lebanon.
Medical sources have said that besides the Hamas militant, his mother and two other members of the family were killed.
Three other people, including a three-year-old girl, were wounded in the incident in eastern Gaza City, one day after the Israeli military warned that civilian homes storing weapons and sheltering "terrorists" were now a target.
The army said two men armed with an anti-tank missile had been spotted on the balcony of a house ready to fire at forces.
"The force responded with tank fire and identified hitting them. One of them is a Hamas terrorist," a spokeswoman said, accusing Palestinian "terrorists" of operating from within the civilian population.
Ground troops on Friday were operating in southern Gaza and the Karni area, east of Gaza City, looking for tunnels and explosives, having withdrawn overnight from the Maghazi refugee camp after a bloody two-day incursion.
Annan calls for restraint
Mr Annan on Thursday lodged the latest international appeal for restraint, calling for an immediate end to what he called the "indiscriminate and disproportionate" violence in the Gaza Strip.
He went on to say that without the immediate cessation of such violence and the reopening of closed crossing points, "Gaza will continue to be sucked in a downward spiral of suffering and chaos, and the region further inflamed."
Living conditions for the 1.4 million people in densely-packed Gaza have badly deteriorated since the West suspended direct aid to the Hamas-led government, plunging the territory deeper into financial crisis.
"What is happening is a strategic risk for Palestinian unity and the Arab nation because this war goes beyond its goals," Mr Haniya said in an address delivered in a mosque in Gaza City's Shatti refugee camp.
The Palestinian Prime Minister said Israel's "war" was seeking to "overthrow the government in arresting ministers and bombing ministries," to "finish with the Palestinian cause" and "sow division".
Mr Haniya said a swap of Palestinian prisoners in exchange for Corporal Shalit was "a national Palestinian demand".