UPDATE 1: Reports of fighting and casualties around northern towns and Gaza City.
Israeli tanks rolled into Gaza late Saturday and troops clashed with Hamas fighters in a step-up to an eight-day offensive that has killed hundreds of Palestinians and caused widespread destruction.
A burning fuel depot lit up the night sky soon after tanks and troops crossed the border and the air force carried out more raids in the biggest Israeli military operation since its 2006 war in Lebanon.
Dozens of Hamas fighters were killed in the initial battles, an Israeli military spokesman said. The Islamist group said on its television station that Israeli soldiers had also been killed and vowed to turned Gaza in a "cemetery" for the invading force.
The claims could not be immediately confirmed.
The Israeli government called up thousands of reservists to join the ground offensive aimed at ending rocket and mortar attacks by Hamas and its militant allies from the enclave sandwiched between Israel and Egypt.
Israeli tanks were reported to be in battles around Gaza City, and the northern towns of Beit Lahiya and Jabaliya. Hamas forces fired back with mortars and rockets, witnesses said.
"Large numbers of forces are taking part in this stage of the operation including infantry, tanks, engineering forces, artillery and intelligence," a military spokesman said.
The military said a 20-nautical-mile naval blockade would be enforced along the coast.
In a statement, Prime Minister Ehud Olmert's office said the army would take over sites in Gaza used to fired rockets at Israel and vowed to deal a "hard blow" at the Islamists.
"It will not be easy or short but we are determined," Israeli Defence Minister Ehud Barak said.
Hamas remained defiant, vowing the Gaza would become a "cemetery" for the Israeli army that would pay a "high price" for its invasion.
"Your incursion into Gaza will not be a walk in the park and Gaza will become your cemetery God willing," Hamas spokesman Ismail Radwan said reading a statement on Hamas television.
"You will not enjoy security as long as our people don't have any," he said, addressing Israelis.
Thousands of Israeli troops and tanks had encircled Gaza and artillery guns fired shells ahead of the offensive. Militant rocket fire from Gaza into Israel on Saturday left three people wounded. Six were fired after the start of the land offensive, the Israeli police said.
Two Hamas military commanders were also killed in air strikes earlier on Saturday.
Israel has staged nearly 800 air raids against Hamas leaders and targets since "Operation Cast Lead" began on Dec. 27.
Gaza medics say more than 463 Palestinians have been killed and 2,310 wounded.
Four people have been killed in Israel by more than 500 rockets fired from Gaza over the same period.
The United Nations Security Council announced it was to hold a special meeting on the situation at 0000 GMT.
Washington has given its key Middle East ally free rein to launch a ground operation.
In his weekly radio address, President George W. Bush called on Hamas "to turn away from terror" and rejected calls for a unilateral ceasefire that he said would allow the Islamists to continue hitting Israel with rockets.
US president-elect Barack Obama made no immediate comment. Many international leaders condemned the offensive however.
Palestinian president Mahmud Abbas said the offensive will have "grave consequences" for the Middle East, a senior aide said.
"President Abbas vigorously condemns this aggression and calls for an urgent meeting of the UN Security Council to put an end to it," Saeb Erakat told newswire AFP.
Abbas was to meet French President Nicolas Sarkozy at his Ramallah headquarters on Monday before flying to the Security Council to make a plea for a ceasefire.
Israel has kept Gaza virtually sealed off since Hamas seized power in a military coup in June 2007 from Fatah forces loyal to Abbas.
French Foreign Minister Bernard Kouchner called the ground invasion a "dangerous military escalation" which had damaged Middle East peace efforts.
"France condemns the Israeli ground offensive against Gaza just as it condemns the continuing firing of rockets," Kouchner said in a statement.
British Prime Minister Gordon Brown urged Olmert to halt the military action, Brown's office said.
"The prime minister has spoken again today to Prime Minister Olmert, and is pressing hard for an immediate ceasefire," a Downing Street statement said.
Demonstrations against the Israeli action were staged around the world.
Up to 100,000 Arab-Israelis attended a rally in Fakhnin, north Israel, and tens of thousands joined demonstrations in London, Paris - where police fought demonstrators - and other European cities.
Concern mounted over how the ground operation would affect the humanitarian situation in Gaza.
Ahead of the invasion, UN agencies have said there is a "critical" emergency in Gaza, where 80 percent of the 1.5 million population relies on international food aid.
Jordan's King Abdullah II told Quartet Middle East peace envoy Tony Blair that the world's "silence" on the humanitarian crisis in Gaza was unacceptable.
Bush and most of the western leaders and media unilaterally blames Hamas for terrorizing Israelis and firing rockets, while projecting Israel on the other hand as defending itself while killing the women and children and the elderly and destroying homes and mosques. Facts are Israel has made the Palestinians homeless and destitute by crippling blockade, divided the Palestinians in West Bank and Gaza and ruling them mercilessly. Unfortunately the Arab world is only giving lip service. If only they could stop the supply of oil for sometime, it will make things happen on their terms and also make the prices of oil stable and favorable for them. If silently they watch the bombings of Lebanon, Syria, Gaza then for sure in coming years it will be their turn and maybe no one will there to mourn them.
I've just read this morning on BBC news that Israel has been engaging on top of everything else in a propaganda war, more specifically on Youtube. Youtube has been out of commission throughout the Middle East for the last 2 or 3 weeks approx. I believe the damage caused to the underseas cables 2 or 3 weeks ago was not accidental and was to prevent anyone voicing their concerns using such a platform. I seriously hope an investigation is held into this. Months ago the US was said to have done the same in a bid to intimidate Iran or to make them believe it would be attacked imminently