Gaza has suffered the highest death toll since Israel's offensive began, with at least 87 people reported killed on Sunday - 67 of them in one area.
Palestinian President Mahmoud Abbas said the deaths in the Shejaiya district east of Gaza City were a "massacre". Witnesses spoke of bodies lying in the streets.
A humanitarian truce was agreed in the area, but lasted less than an hour.
Israel said that 13 of its soldiers had been killed since Saturday night.
The soldiers were all from the Golani Brigade, the Israel Defense Forces said.
It brings to 18 the number of Israeli soldiers who have been killed in the offensive.
The ceasefire in Shejaiya was meant to last from 13:30 to 15:30 local time (10:30-12:30 GMT), according to an Israeli military spokesman.
But a BBC team on the ground reported an exchange of fire less than an hour after the truce began.
Both sides blamed the other for violating the truce.
Israel earlier said it had expanded its operation - launched 13 days ago - against Hamas militants.
In an interview with BBC Arabic, Israeli Prime Minister Benjamin Netanyahu described the Shejaiya district as a "terror stronghold" and a launch pad for rockets fired at Israel.
The BBC's Yolande Knell, in Gaza City, says there have been scenes of panic with thousands of residents fleeing the Shejaiya area.
The death toll rose sharply over the weekend, with the number of Palestinians killed now standing at more than 425 since the operation began, according to Palestinian health officials.
They say the number of wounded from the operation is now more than 3,000.
Paramedics said that rescue workers have so far not been able to get to the eastern part of Shejaiya, an area very close to the Israeli border and about three kilometres (1.2 miles) away from Gaza City, which has seen heavy shelling. Sunday's death toll is expected to rise.
The majority of those killed are civilians, the UN says.
In other developments:
- The Israeli military said it "neutralised" two militants who "emerged from a tunnel" in southern Gaza, with no harm to Israeli troops
- UN Secretary General Ban Ki-moon is due to arrive in Qatar later to meet Mr Abbas
- Hamas is continuing to fire rockets into Israel, with one landing in the city of Ashkelon
At the scene: Yolande Knell in Gaza
The thick, black column of smoke is still rising from Shejaiya, north-east of Gaza City. Earlier in the day there was constant, intense Israeli shelling but a shaky, brief, humanitarian ceasefire produced a period of relative quiet.
This enabled ambulances to enter the area. Medics pulled dead and wounded Palestinians from the rubble of their apartment buildings.
Television pictures have been showing horrific, bloody scenes of dead elderly women and children.
At the Shifa hospital, there is a traffic jam of emergency vehicles by the entrance.
"The hospital was totally overloaded. For many of us, these were the worst scenes we've ever had, not only for the density of patients and total overwhelming of our capacity but because of all this pain and agony," says Norwegian doctor, Mads Gilbert, who has been working in the emergency ward since last night and has been in Gaza during previous conflicts.
"There were children in enormous pain. Totally devastated families were bringing their dead children in and lying on the ground screaming."
Two Israeli civilians have also died since the beginning of the offensive on 8 July.
The Israel Defense Forces (IDF) sent ground troops into Gaza on Thursday after days of heavy air and naval barrages failed to stop rocket fire from Gaza.
Israel says the operation is necessary to target Hamas tunnel networks, which it says it could not do from the air alone.
Lt Col Peter Lerner, an IDF spokesman, said the offensive was being expanded "to restore security and stability to Israel's residents and citizens".
Meanwhile, the UN warned it was running out of supplies to help more than 50,000 Palestinians who have sought shelter at its schools in Gaza.
A UN official said the number of people fleeing was much higher than expected, with both the Israeli and Egyptian borders closed to Gazans.
Qatar is expected to host a meeting between President Abbas and Ban Ki-moon on Sunday before the UN chief continues on to Kuwait, Egypt, Israel, the Palestinian Territories and Jordan.
Mr Abbas is also due to meet Hamas leader Khaled Meshaal.
Hamas rejected an Egypt-brokered ceasefire last week, saying any deal with Israel must include an end to a blockade of Gaza.