Israeli tanks began moving into the Mughazi refugee camp in central Gaza early Wednesday under cover of machine gun fire from troops.
The Israel Defense Forces confirmed that an operation was in progress.
The camp is near the Gaza-Israel fence across from the Palestinian town of Deir al-Balah. Israeli forces operated in the region late last week before withdrawing.
During the activity five soldiers were injured when a grenade was hurled at them; the forces returned fire, striking two terrorists.
Medical sources in Gaza said seven Palestinians were killed by Israeli soldiers during the operation.
Two of the soldiers sustained moderate wounds while the three others were lightly hurt in the incident; all of the injuries were caused by shrapnel, and the soldiers were evacuated to the Soroka Medical Center in Beer Sheva.
Palestinian sources claimed five people were injured by IDF fire during the tanks’ entrance, and residents of the refugee camp claimed four children were lightly hurt when a tank opened fire on their home.
The incursion was preceded by several hours of tank movements on the Israeli side, as well as exchanges of fire between soldiers and Palestinian gunmen; one gunman was seriously wounded.
Israel began a large-scale operation in Gaza on June 28, three days after Hamas-lined gunmen tunneled under the border and attacked an Israeli army base at a Gaza crossing, killing two soldiers and capturing a third.