Israel has admitted that it is using reservists to boost its forces as the conflict in the Gaza Strip rages on.
The Israeli military announced for the first time that reserve units are operating in the Gaza Strip alongside regular Israeli troops, but an army spokesperson denied that this meant the third phase of the campaign had begun.
Palestinian officials say nearly 40 people have been killed on Monday, bringing the total since the conflict began to 900.
Earlier, Israeli Prime Minister Ehud Olmert said Israel was nearing the goals of its military campaign in the Gaza Strip, and that attacks would continue.
Mr Olmert urged more patience and effort on Sunday, as Israel's troops reportedly engaged in fierce fighting in Gaza City, killing at least 40 Palestinians on the 16th day of a devastating offensive.
Thick black smoke rose over the city of Gaza as fighting raged on in the Hamas-ruled territory in defiance of international calls for a ceasefire. Medical workers said about half of the Palestinians killed on Sunday were civilians.
"Israel is getting close to achieving the goals it set for itself," Mr Olmert told his cabinet in Jerusalem, giving no timeframe for an end to a campaign launched with the declared aim of ending Hamas rocket attacks.
Referring to last week's United Nations Security Council call for an immediate ceasefire, Mr Olmert said "nobody should be allowed to decide for us if we are allowed to strike". Both Israel and Hamas have rejected the UN resolution.
Israel has dropped leaflets and left phone messages warning Gazans to stay away from areas used by Hamas and that the operation would soon escalate - a politically risky move a month before Israel's national election.
Backed by helicopter gunships, Israeli troops and tanks pushed into eastern and southern parts of the city of Gaza on Sunday, confronting Hamas militants who fired armour-piercing missiles and mortar bombs.
Palestinians say they are terrified and have no safe place to hide in Gaza. Medical officials say 900 have died and more than 3,000 have been wounded since the offensive began on 27 December.
Thirteen Israelis - three civilians hit by rocket fire and 10 soldiers - have been killed, Israel says.
Aid agencies say Gaza's 1.5 million residents are in urgent need of food and medical aid.
Two Norwegian doctors working in the Gaza Strip say health services are close to collapse because of Israel's military campaign.
They say the main hospital in Gaza lacks specialist doctors and basic medical equipment. They also say half of their patients are civilians, and warn that the death toll will spiral if the thousands of injured people are unable to be treated.
Hamas leader Khaled Meshaal said his ruling Islamist group would not consider a ceasefire until Israel ended its air, sea and ground assault and lifted its blockade of Gaza. A Hamas delegation held talks in Cairo on an Egyptian truce plan.
Israel wants a halt to rocket attacks and arrangements to ensure that Hamas cannot rearm through tunnels under the Egypt-Gaza border. An Israeli defence official was to visit Egypt on Monday to press for tougher anti-smuggling measures.
Obama vows to act
In Washington, United States President-elect Barack Obama said he would begin the search for Middle East peace immediately on becoming president on 20 January and the Gaza conflict underscored his determination to become involved early.
Mr Obama says he is deeply distressed by the loss of Palestinian and Israeli lives.
Israeli actions have been denounced by the Red Cross, UN agencies and Arab and European governments.
Tens of thousands of people worldwide have attended demonstrations over Gaza.
In London, thousands of pro-Israel supporters gathered in Trafalgar Square to call for an end to the violence.
Organisers said they want Gaza and Israel to live in peace but believe Palestinians must also accept some responsibility for the bloodshed.