At least two Palestinians have been killed and 11 others wounded, following an Israeli army raid Sunday into the Gaza Strip.
Fierce fighting erupted after Israeli troops backed by tanks and attack helicopters swept into Khan Younis.
Palestinian gunmen opened fire at the soldiers from inside a school, a mosque and a hospital in the town, located in the southern part of the Gaza Strip.
At least 10 bombs were detonated near the troops. Palestinian militants also hurled grenades, injuring two soldiers.
Soldiers fired back from a helicopter.
One eight story building, which had been used by Palestinian gunmen, was destroyed by the troops.
The Israeli Army says the raid was launched to clear the area of buildings used as cover by snipers to shoot at Israeli army posts and Jewish settlements in the territory.
Last week an Israeli army officer was killed in the area by a Palestinian sniper.
The Israeli army has intensified its operations in the Gaza Strip in recent weeks, after the Palestinian Islamic group Hamas claimed responsibility for planting a bomb in the path of an Israeli tank.
The blast destroyed the tank and killed four Israeli soldiers.
Israeli soldiers also raided a suspected bomb factory near the West Bank city of Hebron Sunday, where they claimed to have found dozens of kilograms of fertilizers used to make explosives.
Machinery for the production of guns and grenades were also reported to have been found at the site.