A top Israeli official criticised US President Joe Biden on Thursday for threatening to stop certain arms supplies to Israel if it invades the crowded Gaza city of Rafah.

"This is a difficult and very disappointing statement to hear from a president to whom we have been grateful since the beginning of the war," Israel's ambassador to the United Nations, Gilad Erdan, said on public radio in Israel's first reaction to Biden's warning.

Israel has defied international objections by sending in tanks and conducting "targeted raids" in the eastern areas of Rafah.

It says Rafah is home to Hamas's last remaining battalions but the city on the border with Egypt is also crammed with displaced Palestinian civilians.

"If they go into Rafah, I'm not supplying the weapons that have been used... to deal with the cities," Biden told CNN, in his starkest warning to Israel since the start of the war.

"Civilians have been killed in Gaza as a consequence of those bombs," Biden said. "It's just wrong."

Erdan said Biden's comments would be seen by Israel's foes Iran, Hamas, and Hezbollah as "something that gives them hope to succeed."

"If Israel is restricted from entering an area as important and central as Rafah where there are thousands of terrorists, hostages and leaders of Hamas, how exactly are we supposed to achieve our goals?" he said. (AFP)