Israel's military struck the Gaza Strip on Monday a day after truce talks in Cairo coincided with a major but brief cross-border escalation involving Iran-backed Hezbollah in Lebanon.

The Gaza war, triggered by Hamas's October 7 attack on Israel, has drawn in Tehran-aligned armed groups across the Middle East, repeatedly heightening fears of a broader regional conflagration.

In the latest flare-up between Israel and Hamas-ally Hezbollah, the Lebanese group on Sunday launched rockets and drones in retaliation for a top commander's killing as Israel carried out air raids the military said thwarted a larger attack.

Israel swiftly revoked a state of emergency declared early on Sunday, and Hezbollah said its operation was "completed."

Intense diplomacy has sought to head off a broader retaliation for the late July killings of senior Hezbollah commander Fuad Shukr in an Israeli strike on Beirut, and of Hamas political leader Ismail Haniyeh in Tehran.

Mediators held meetings in the Egyptian capital on Sunday but reported no breakthrough in months of protracted negotiations to end the Gaza war as the fighting raged on.

A key sticking point has been Israel's insistence that it keep control of several strategic areas, including the so-called Philadelphi Corridor along the Gaza-Egypt border, to stop Hamas from re-arming, something the militant group has refused to countenance.

Cairo, which has been mediating the talks alongside Qatar and the United States, made clear on Monday it would not support continued Israeli control of the corridor, according to state-linked media.

Egypt "reiterated to all parties that it will not accept any Israeli presence" along the corridor, Al-Qahera news reported, citing a high-level source.

On the ground, witnesses reported air strikes and shelling in Gaza City and other parts of the besieged Palestinian territory overnight and Israel's military said it had struck militants in the south.

Medics said an air strike on a Gaza City house killed at least five people, with two rescuers saying more victims may be buried in the ruins in Al-Rimal neighbourhood.

"There are still martyrs and body parts under the rubble," ambulance driver Hussein Muhaysen said.

An Israeli military statement said troops had "eliminated" dozens of militants over the past day in the southern areas of Khan Younis and Rafah, and near Deir al-Balah in central Gaza.

Hamas's October 7 attack resulted in the deaths of 1,199 people, most of them civilians, according to a tally based on Israeli official figures.

Israel's retaliatory military campaign has killed at least 40,435 people in Gaza, according to the Hamas-run territory's health ministry, which does not break down civilian and militant deaths. The UN rights office says most of the dead are women and children.

Out of 251 hostages seized by Palestinian militants in their attack, 105 remain in Gaza including 34 the Israeli military says are dead.

Hezbollah has traded near-daily fire with Israeli forces throughout the war, in what the group says is support for its Palestinian ally Hamas.

After weeks of retaliation threats, Hezbollah early on Sunday launched what it said was part of its response to Shukr's killing.

Speaking hours after Hezbollah announced its attacks on Israel with hundreds of rockets and drones, the group's chief Hassan Nasrallah said the "main target" was an intelligence base outside Tel Aviv, more than 100 kilometres from the Lebanese border.

Israel's military said there were "no hits" on the Glilot intelligence complex, which according to Israeli media is home to the headquarters of the Mossad spy agency.

Israeli air strikes at the same time hit more than 270 targets in Lebanon, "90 percent" of which were rockets "aimed at northern Israel," the military said.

Israeli Prime Minister Benjamin Netanyahu told his cabinet the strikes were "not the final word" in the campaign against Hezbollah.

Nasrallah appeared to suggest Hezbollah's retaliation for Shukr's killing might be over, saying "if the result is satisfactory" then its response "has been accomplished."

Iranian Foreign Minister Nasser Kanani praised the Hezbollah attack, saying the "strategic balance has undergone fundamental changes" to the detriment of Israel.

A Hamas official said that a delegation from the group met mediators in Egypt's capital on Sunday. Israeli negotiators were also scheduled to go to Cairo.

The talks have been based on a framework laid out in late May by US President Joe Biden and a "bridging proposal" Washington put forth earlier this month with support from Qatari and Egyptian mediators.

More than 10 months of war have left large parts of Gaza in ruins, ravaged its healthcare system and sparked a dire humanitarian crisis and warnings of famine.

A batch of polio vaccines entered Gaza on Sunday, Israeli authorities said. UN agencies have planned a mass inoculation drive after the first case there in 25 years was confirmed.

Successive Israeli evacuation orders have forced many Gazans, most of whom have already been displaced at least once by the war, to move again.

Speaking to reporters on Sunday from her hospital bed outside the Al-Aqsa Martyrs Hospital in Deir al-Balah, Tamam al-Raei said she did not know where to seek safety.

"I have a war injury. I have broken bones and have had an amputation, and I have been receiving treatment for that," she said.

"But now they're telling us to evacuate Al-Aqsa. Where do we go? Where do I get treatment?" (AFP)