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Five Palestinians were killed, including two children, and several wounded when Israeli aircraft struck tents for displaced people west of Khan Younis, according to medics at the Kuwait Field Hospital.
The strikes hit Gaza's coastal al-Mawasi area.
Medical teams said the dead were two women aged 46 and 30, a 36-year-old man, and two boys, aged eight and 10.
Some 32 injured people were treated in hospital, the medics said.
Rescue workers told the BBC they recovered the bodies from al-Najaat camp, a cluster of tents that has housed hundreds of displaced people in recent months.
The Israeli military said it had "struck a Hamas terrorist" after five of its soldiers were wounded earlier on Wednesday.
"The Hamas terrorist organization carried out a blatant violation of the ceasefire agreement, during which terrorists attacked IDF troops deployed in the Rafah area," the Israel Defense Forces said in a statement.
Israeli Prime Minister Benjamin Netanyahu had vowed to "respond accordingly".
Witnesses said the initial strike had targeted a tent inside the al-Mawasi displacement area, followed by blasts near the Kuwait hospital, prompting panic among families sheltering nearby.
Hamas called Israel's action barbaric, indiscriminate and a violation of the ceasefire which began on 10 October.
The Israeli military launched its offensive in Gaza in response to the Hamas-led attack on southern Israel on 7 October 2023, in which about 1,200 people were killed and 251 others were taken hostage.
More than 70,100 Palestinians have since been killed as a result of Israel's campaign, according to the territory's Hamas-run health ministry.
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