Israel's military said 20 Palestinian militants were killed Monday and dozens detained during a raid on Gaza City's Al-Shifa hospital that targeted "senior Hamas terrorists".

Soldiers rolled in with tanks and air strikes hit the area around the Hamas-ruled territory's biggest medical centre, a complex crowded with patients and displaced people.

"Twenty terrorists have been eliminated at Al-Shifa hospital thus far in various engagements, and dozens of apprehended suspects are currently in questioning," the army said in a statement.

Israel earlier reported the "elimination" of Fayq al-Mabhouh, a man they identified as a Hamas internal security official. A Gaza police source confirmed his death, saying Mabhouh was a brigadier general in the force.

The latest military operation around the hospital -- which was raided by Israeli troops before, in November, sparking an international outcry -- triggered alarm from the World Health Organization.

"We are terribly worried about the situation at Al-Shifa Hospital in northern Gaza," WHO chief Tedros Adhanom Ghebreyesus wrote on X, formerly Twitter.

"Hospitals should never be battlegrounds."

An AFP journalist witnessed air strikes on buildings in the area around the hospital and reported seeing "hundreds of people, mostly children, women, and the elderly, fleeing their homes".

Israel has repeatedly said the complex housed an underground Hamas control base, a claim denied by the militants.

Tedros said that Al-Shifa had "only recently restored minimal health services".

Most of Gaza's hospitals are no longer functioning, according to the United Nations.

The Israeli military reported gun battles at the Al-Shifa compound including one that it said killed Mabhouh.

"Numerous weapons were located in the room adjacent to where he was eliminated," the military said.

Fayq al-Mabhouh is the brother of Mahmoud al-Mabhouh, one of the founders of the armed wing of Hamas, according to family members.

Mahmoud al-Mabhouh was killed in 2010 in Dubai, in a hit which United Arab Emirates investigators suspected was the work of Mossad, the Israeli spy agency.

Israel said the Al-Shifa "operation is based on intelligence information indicating the use of the hospital by senior Hamas terrorists".

On Monday, the army released a video showing what it said were weapons and money seized from the hospital which had been used by Hamas and another armed group, Islamic Jihad.

In January Israel's army said it had "completed the dismantling" of Hamas's command structure in the northern Gaza Strip, where Al-Shifa is located.

The military has carried out operations at other hospitals in Gaza since war broke out on October 7, when Hamas militants attacked Israel from Gaza.

The unprecedented attack resulted in about 1,160 deaths in Israel, mostly civilians, according to an AFP tally based on official Israeli figures.

Gaza militants also seized about 250 hostages, of whom Israel believes 130 remain in Gaza, including 33 who are presumed dead.

Israel has carried out a relentless bombing campaign and ground offensive that Gaza's health ministry says has killed at least 31,726 people, most of them women and children.