Hamas-run Gaza's civil defence agency said it found around 60 bodies after Israeli troops withdrew from parts of Gaza City on Friday, as heavy fighting gripped the Palestinian territory.
The grisly discovery came as international mediators pushed on with efforts to halt the war now raging into its 10th month.
US President Joe Biden said at a NATO summit in Washington on Thursday that despite problems, US diplomats and other mediators were making "progress" towards a ceasefire and stressed that "it's time to end this war".
The bodies were found in the Tal al-Hawa and Al-Sinaa districts, the civil defence agency said. Israeli forces had moved into the neighbourhoods this week after ordering civilians to evacuate on Monday.
"There are still missing people under the rubble of destroyed homes, which is difficult for our crews to reach," agency spokesman Mahmud Bassal said.
Residents and the agency said Israeli troops had pulled out after days of fighting with Hamas militants. This was not immediately confirmed by Israel.
'Trapped'
Gaza's health ministry had earlier reported 32 deaths in the territory, saying that the "martyrs, a majority of them children and women, were taken to hospitals overnight, because of continued massacres".
Media linked to the territory's Hamas rulers, whose October 7 attack sparked the war, said that Israeli forces had launched more than 70 new air strikes.
Israel's military said it was also fighting in the Rafah area of the south, where its troops had "eliminated numerous terrorists in close-quarters combat and aerial strikes".
But the main battleground in recent days has been Gaza City, where two weeks of fighting devastated the eastern district of Shujaiya.
The Israeli army dropped thousands of leaflets on Wednesday urging all Gaza City residents to flee what it called a "dangerous combat zone" -- an area where the United Nations said up to 350,000 people were staying.
One of those newly displaced, Umm Ihab Arafat, sat with her children on a sand pile amid the rubble as the incessant hum of Israeli drones filled the sky.
"I have been displaced four times," she said, pleading for a break for her and her children. "They are entitled to rest, their eyes are full of horror and fear."
The International Committee of the Red Cross said "entire families are trapped and desperately seek security. The huge needs are beyond our capacity to respond".
The ICRC said Gaza City residents had been instructed to move south "to areas that are overcrowded, lacking in essential services and are experiencing hostilities".
Truce talks
Israel and Hamas have engaged in months of indirect talks via Qatari, US and Egyptian mediators to reach a still elusive truce and hostage release deal.
At the latest meeting in Doha on Wednesday, Israeli officials discussed the conditions for a ceasefire with US and Qatari mediators.
The head of Israel's Shin Bet internal security agency Ronen Bar was headed for talks in Cairo, Prime Minister Benjamin Netanyahu's office said.
Netanyahu again insisted that any deal must allow Israel to meet all its war aims -- destroying Hamas as well as bringing home all the hostages.
He also said Israel needs to maintain control of Gaza's southern border with Egypt to prevent weapons being "smuggled to Hamas".
Biden has laid out what he called an Israeli plan which would see a six-week truce in which hostages held in Gaza would be freed in exchange for Palestinians in Israeli prisons. A second phase would see talks on a full end to the war.
Biden acknowledged on Thursday that "difficult, complex issues" remain but insisted that "we're making progress".
"The trend is positive," he said, "and I'm determined to get this deal done and bring an end to this war, which should end now."
Biden also stood firm on his decision to hold up delivery of massive 2,000-pound (900kg) bombs over concerns they could be used in populated areas, even as his administration moved forward on sending Israel less powerful 500-pound munitions.
He again pressed Israel for a "day-after" plan for Gaza and spoke of his diplomacy to persuade Arab states to help with security.
Hamas has proposed an independent and non-partisan government for both post-war Gaza and the Israeli-occupied West Bank, said Hossam Badran, a member of the group's political bureau.
End of troubled aid pier
The war started with Hamas's October 7 attack on southern Israel which resulted in the deaths of 1,195 people, mostly civilians, according to an AFP tally based on Israeli figures.
The militants also seized 251 hostages, 116 of whom remain in Gaza, including 42 the military says are dead.
Israel responded with a military offensive that has killed at least 38,345 people in Gaza, also mostly civilians, according to the health ministry in Hamas-ruled Gaza.
The World Health Organization said that only five trucks carrying medical supplies were allowed into Gaza last week, while over 70 more are waiting at the border.
Meanwhile, a problem-plagued US effort to get aid in by sea will soon end permanently, the US military said.
US troops built the $230-million pier but the temporary facility has been repeatedly put out of use by high seas.