Israeli troops waged fierce battles against Hamas near Gaza's biggest hospital, where thousands were trapped, and officials said a lack of fuel caused deaths of premature babies and critical patients.

In Gaza City, Al-Shifa hospital is caught in Israel's ground offensive aimed at destroying Hamas, and the compound has been repeatedly hit by strikes, one of which Hamas health officials said destroyed the cardiac ward on Sunday.

The Israeli military has denied deliberately targeting hospitals and has accused the Islamist militant group of using medical facilities or tunnels underneath them as hideouts – a charge Hamas denies.

Fears intensified for Palestinians seeking shelter and patients needing treatment after Gaza City's Al-Quds hospital went out of service due to lack of generator fuel, the Palestinian Red Crescent said.

The bloodiest-ever Gaza war broke out after Hamas fighters poured through the militarised border with Israel on October 7, killing around 1,200 people, mostly civilians, and taking about 240 people hostage, according to Israeli figures.

Israel's relentless campaign in response has killed at least 11,180 people in Gaza, also mostly civilians and including 4,609 children, according to the Hamas government's media office.

Israel’s Prime Minister Benjamin Netanyahu told US media "there could be" a deal to free some of the roughly 240 hostages seized by Palestinian militants on October 7 and believed held in Gaza.

But the Israeli premier, facing increasing pressure at home over the captives, stopped short of providing any details. "The less I say about it, the more I'll increase the chances that it materialises," he told NBC.

Despite growing calls for a ceasefire, Netanyahu has flatly rejected halting the fighting without release of the hostages. (AFP)