Palestinians inspect the damage following an Israeli bombardment on Khan Yunis, Gaza, on Tuesday. AFP

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 group has refused to countenance.

Palestinians inspect the damage following an Israeli strike on Khan Younis, Gaza Strip on Tuesday. AFP

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 and AFP correspondents 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 fighters in the south.

Medics said an air strike on a Gaza City house killed at least five people, with two rescuers telling AFP 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 fighters over the past day in the southern areas of Khan Yunis and Rafah, and near Deir al-Balah in central Gaza.

Agence France-Presse