Displaced Palestinians leave an area in east Khan Yunis after the Israeli army issued a new evacuation order. AFP

Tens of thousands of Palestinians have fled southern Gaza since Israel issued an evacuation order, amid fears of a new offensive in the area which came under Israeli bombardment on Wednesday.

On Israel's northern front, Lebanon's Hezbollah said it fired 100 rockets at Israeli targets in retaliation for a strike that killed a senior commander, heightening fears of full-scale war between the longtime foes.

The UN agency supporting Palestinian refugees, UNRWA, said 250,000 people had been affected by the latest evacuation order that covers southern areas bordering Israel and Egypt.

Almost all patients in the European Gaza Hospital and the Red Cross field hospital decided to flee following the evacuation order, the World Health Organization said.

Though the European Gaza Hospital itself is not under evacuation instructions, the order has impacted operations.

"Now only three patients remain at the European Gaza Hospital and three at the ICRC field hospital," the WHO said, citing figures from Tuesday.

UN chief Antonio Guterres's spokesman said the southern evacuation order covers 117 square kilometres (45 square miles), "making it the largest such order since October".

"Frankly, it's a step in the wrong direction. The direction we want to be heading is to find a negotiated two states solution," said the spokesman, Stephane Dujarric.

Antonio Guterres speaks during a press conference. File photo

Andrea De Domenico, who heads the United Nations humanitarian office, OCHA, in the occupied Palestinian territories, said nine out of 10 people in Gaza had been displaced at least once by the war.

"Behind these numbers, there are people... that have fears and grievances. And they had probably dreams and hopes; the less and less I fear today, unfortunately," he told journalists.

"People who in the last nine months have been moved around like pawns in a board game."

Amid the war, siege and mass displacement, more than 150,000 people have contracted skin diseases in the squalid conditions, the World Health Organization said.

Wafaa Elwan, a Palestinian mother of seven who now lives in a tent city, said: "We sleep on the ground, on sand where worms come out underneath us."

She said her five-year-old son, much of whose body was covered in rashes and welts, "can't sleep through the night because he can't stop scratching his body".

Agence France-Presse