Journalists and witnesses in Rafah, in southern Gaza, say Israeli tanks have seized control of a key roundabout in the heart of the city.
The takeover of the al-Awda roundabout - around 500 metres from the border with Egypt - came amid intense Israeli shelling.
Local officials said at least 16 people were killed in Rafah overnight, and there are reports of at least 21 deaths at a displaced persons camp on Tuesday.
Hundreds of thousands of people displaced from other parts of the Gaza Strip have been sheltering in Rafah.
On Sunday, Israeli air strikes killed 45 people in a camp for displaced people - Israel called it a tragic mishap.
The United Nations Security Council will hold an emergency meeting later on Tuesday to discuss Sunday's strike.
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