Israeli soldiers shot dead a Palestinian woman and wounded five others, during exchanges of gunfire with Palestinian militants in the Gaza Strip.
The Israeli Army says that troops were sent to search for weapons being smuggled through tunnels in the Rafah refugee camp in southern Gaza, close to the border with Egypt.
The soldiers were attacked by Palestinian gunmen who opened fire with automatic rifles and anti-tank weapons. The Israeli army says the troops returned fire.
Among the casualties was a 31-year-old Palestinian woman and mother of two.
Earlier, an 11 year-old boy was shot in the head and critically injured, after Israeli troops fired machine guns as cover for bulldozers demolishing houses, Palestinian witnesses said.
It was the second Israeli incursion into Rafah in as many days, and follows a suicide bombing last week by a Palestinian mother that killed four Israeli security men at a border crossing in the northern Gaza Strip.
The Israeli Army says the operation is aimed at locating and destroying tunnels used to smuggle weapons and explosives under the border with Egypt. Israeli troops on Tuesday also knocked down 25 houses and a mosque in Rafah.
Palestinian officials say hundreds of residents have been left homeless.
The Israeli military says the structures were being used by Palestinian gunmen to fire on soldiers.
Also in Gaza, Palestinian officials claim that the Israeli Army has issued eviction notices to 10 Palestinian families living near the Jewish settlement of Kfar Darom.
The Palestinian officials say that the families were informed that their land will now be used for Israeli security facilities.
Palestinian human rights groups say they will launch legal actions against the planned evictions.
Meanwhile, the Palestinian Prime Minister, Ahmed Qureia, called for an end to Israel's military operation in Rafah, saying such raids are dangerous and could escalate violence throughout the region.