The Israeli army said on Monday that the bodies of four hostages retrieved from Gaza last week were found in tunnels under Jabalia, where troops have been engaged in fierce fighting in recent days.

The army said last week it had recovered the bodies of Ron Benjamin, Yitzhak Gelerenter, Shani Louk, and Amit Buskila, all of whom it said had been killed in Hamas's October 7 attack on southern Israel.

Their remains were recovered "from underground tunnels in Jabalia in northern Gaza," the army said late on Monday in a statement.

During a military operation, Israeli soldiers searched a suspected building in which a tunnel shaft was located, the army said.

"Soldiers then entered the underground tunnel route in a night operation and inside it conducted combat," it said.

During the fighting the soldiers "located the bodies of the hostages and rescued them from the tunnels," the army said.

The four were taken hostage during the attack on the Nova music festival.

Thousands of young people had gathered on October 6 and 7 to dance to electronic music at the event held near Re'im kibbutz close to the Gaza border.

Fighters from Hamas crossed over from Gaza and killed more than 360 people at the festival, Israeli officials have said.

The Nova festival victims accounted for nearly a third of the more than 1,170 people killed in the October 7 attack, most of them civilians, according to a tally based on Israeli figures.

Out of the 252 people taken hostage that day, 124 are still being held inside the Gaza Strip, including 37 the army says are dead.

Israel's retaliatory offensive against Hamas has killed at least 35,562 people in Gaza, also mostly civilians, according to data provided by the Hamas-run territory's health ministry.

Since early May the Israeli military has been engaged in renewed street battles in northern and central Gaza.

On Friday, the army said that the fighting in the northern town of Jabalia was "perhaps the fiercest" in over seven months of war. (AFP)