Jerusalem, Jan. 13: Israeli troops have entered Gaza City after artillery, attack helicopters and navy gunboats, which had shelled the coast from the west, backed up the ground forces.

According to Sky News, Special Forces advanced into the southern neighbourhood of Tal al Hawa after midnight and were ambushed by Palestinian fighters.

Tanks then pushed into the district and opened fire, supported by aerial bombing.

The armed wing of Hamas, the Ezzedine al Qassam Brigades, said fighters had knocked out two Israeli tanks in the Zeitun area with rocket-propelled grenades. Israel denied the claim.

One Palestinian was killed by tank fire in Zeitun, medics said.

Witnesses said three people were hurt when an air strike destroyed a house in the Sheikh Radwan district.

"We are tightening the encirclement of the city," said the commander of the operation, Brigadier Eyal Eisenberg.

The move came hours after the Israeli Prime Minister Ehud Olmert warned militants they would face an "iron fist" unless they agreed to Israel''s terms to end the fighting.

More than 900 Palestinians have been killed since the start of the Israeli operation on December 27. Ten Israeli soldiers have died, along with three civilians killed in rocket and mortar fire from Gaza. (ANI)