A UN training centre sheltering tens of thousands of displaced people was hit on Wednesday, causing "mass casualties" as buildings blazed, a senior UN relief official said as Israeli forces advanced through southern Gaza's main city.

Israeli forces also cut off southern Gaza's main hospitals in their assault on Khan Younis, Palestinian officials said, and closed the main escape route for hundreds of thousands of residents and people who have sought refuge there.

In response to questions about the fire at the centre - run by UNRWA, the UN relief organisation for the Palestinians - the Israeli military said the wider area was a significant base of Hamas militants.

"Dismantling Hamas' military framework in western Khan Yunis is the heart of the logic behind the operation," it said.

Several sources had earlier told Reuters that Israel and the Hamas group that runs Gaza had made some progress in weeks of proxy talks on a 30-day ceasefire, during which Israeli hostages and Palestinian prisoners would be freed and more aid would enter the enclave.

But that prospect appeared distant on Wednesday.

In their biggest operation in a month, Israeli tanks have pushed through Khan Younis, where hundreds of thousands of displaced Palestinians are sheltering after leaving the north - the early focus of the war.

Their main target appears to be the area around Khan Younis' long-standing refugee camp, which includes the Nasser and Al-Amal hospitals and also the training centre run by UNRWA.

"Fighting is escalating in Khan Younis ... the @UNRWA Training Centre sheltering 10Ks of displaced people has just been hit - buildings ablaze and mass casualties - safe access to/from the centre has been denied for 2 days - people are trapped," Thomas White, the director of UNRWA affairs in Gaza, said on X.

GUNBATTLES

Residents reported fierce gunbattles in the west of the city, where the military said it had killed "numerous" squads of gunmen "with sniper, tank and aerial fire".

Gaza health ministry spokesman Ashraf Al-Qidra said in a statement: "The occupation is isolating hospitals in Khan Younis and carrying out massacres in the western area of the city ...

"Hundreds of injuries, patients, and childbirth cases face serious complications due to the lack of access to Nasser Medical Complex."

The Palestinian Red Cross Society, which runs the Al-Amal hospital, said troops had blockaded its staff inside and imposed a curfew in the area, including its local headquarters, where three displaced individuals had been killed.

Israel says Hamas fighters operate in and around hospitals, which hospital staff and Hamas deny.

On Tuesday, the Israeli military had ordered the evacuation of the area, which the UN humanitarian office said held half a million people, four-fifths of them displaced by fighting in other parts of the coastal strip.

However, Israeli tanks advancing eastward down the al-Bahar road towards Nasser hospital blocked the escape route from the city towards the Mediterranean coastal highway.

The highway leads towards Rafah on Gaza's southern edge bordering Egypt - already crammed with more than half the enclave's 2.3 million people. Some people resorted to dirt roads to try to escape Khan Younis, residents and freelance reporters leaving the area said.

Palestinian health officials said at least 25,700 Gazans had been killed in the war, including 210 in the previous 24 hours, with thousands more feared lost under the rubble of destroyed buildings.

Israel says it has killed around 9,000 militants in total, a figure that Hamas dismisses as an attempt to "portray a fake victory".