A picture taken from Rafah shows smoke billowing during Israeli bombardment over Khan Yunis. AFP

Israel has threatened to invade Gaza's Rafah by the start of Ramadan if Hamas does not return the remaining hostages by then, despite international pressure to protect Palestinian civilians sheltering in the southern city.

With prospects for truce talks dimmed, the United States and other governments, as well as the United Nations, have issued increasingly urgent appeals to Israel to call off its planned offensive on Rafah.

The Israeli government says the city on the Egypt border is the last remaining stronghold in Gaza of the Palestinian group Hamas.

But it is also where three-quarters of the displaced Palestinian population has fled, taking shelter in sprawling tent encampments without access to adequate food, water or medicine.

"The world must know, and Hamas leaders must know — if by Ramadan our hostages are not home, the fighting will continue everywhere, including the Rafah area," Benny Gantz, a retired military chief of staff, told a conference of American Jewish leaders in Jerusalem on Sunday.

"Hamas has a choice. They can surrender, release the hostages and the civilians of Gaza can celebrate the feast of Ramadan," added Gantz, a member of the three-person war cabinet.

Ramadan, the Muslim holy month, is expected to begin around March 10.

Mourners react next to the bodies of Palestinians killed in Israeli strikes at a hospital in Rafah. Reuters

Gantz said the offensive will be carried out in coordination with American and Egyptian partners to "minimise the civilian casualties as much as possible".

But where Palestinians can go after four months of war have flattened vast swathes of the Strip remains unclear.

"There's no safe place. Even the hospital is not safe," Ahmad Mohammed Aburizq told the media from the morgue of a Rafah hospital where mourners gathered around a loved one wrapped in a white body bag.

"That's my cousin — he was martyred in Al-Mawasi, in the 'safe area'. And my mother was martyred the day before."

Agence France-Presse