Israeli missiles set ablaze a tent camp for displaced Palestinians in southern Gaza, killing or wounding dozens of people, the enclave's civil emergency service said on Tuesday, in what the Israeli military called a strike on a Hamas command centre.

The Hamas-run Gaza government media office put the number of fatalities at more than 40. It said that at least 60 others were wounded in the strikes and many remained missing as rescue workers continued their searches early on Tuesday.

Residents and medics said the tent encampment near Khan Younis in the Al-Mawasi area, which Israel has designated a humanitarian safe zone for displaced Palestinians, was struck by at least four missiles. The camp is crowded with families ordered by the Israeli military to flee there from elsewhere in the territory.

The Gaza civil emergency service said at least 20 tents caught fire, and missiles caused craters as deep as nine metres. It said the victims included women and children but did not immediately provide a breakdown of deaths and injuries.

There was no immediate comment from the Gaza Health Ministry, which compiles casualty figures. Earlier, the Hamas-aligned Shehab News Agency said 40 Palestinians were killed.

"Our teams are still moving out martyrs and wounded from the targeted area. It looks like a new Israeli massacre," a Gaza civil emergency official said.

The official said that teams had been struggling to search for victims who might have been buried.

The Israeli military said it "struck significant Hamas terrorists who were operating within a command and control centre embedded inside the Humanitarian Area in Khan Younis."

"The terrorists advanced and carried out terror attacks against IDF troops and the state of Israel," the statement said, referring to the Israeli Defence Forces.

Hamas denies fighters in camp

Hamas, the Islamist group that controlled Gaza before the conflict, denied Israeli allegations that gunmen were present in the targeted area, and rejected accusations it exploited civilian areas for military purposes.

"This is a clear lie that aims to justify these ugly crimes. The resistance has denied several times that any of its members exist within civilian gatherings or use these places for military purposes," said Hamas in a statement.

Ambulances raced between the tent camp and a nearby hospital, while Israeli jets could still be heard overhead, residents said.

Nearly all of Gaza's 2.3 million people have been forced from their homes at least once, and some have had to flee as many as 10 times.

Israel's assault on Gaza has killed more than 40,900 Palestinians, according to the local Health Ministry. Israel attacked the enclave after Hamas-led militants killed around 1,200 people and took another 250 hostage in a surprise attack on Oct. 7, according to Israeli tallies.

The two warring sides each blame the other for a failure so far to reach a ceasefire that would end the fighting and see the release of hostages.