Israeli troops have killed at least seven Palestinians in Gaza Friday in an operation aimed at exposing and sealing tunnels used to smuggle arms from Egypt. At least two children are reported to be among the victims.

Israeli soldiers backed by tanks and armored vehicles moved into the Palestinian refugee camp at Rafah, close to Gaza's border with Egypt.

They were joined by special Israeli forces, including engineering units with dogs trained to uncover tunnels.

The troops, who entered the camp before dawn, ran into fierce resistance from Palestinian gunmen who battled with the soldiers until after daybreak on Friday.

Most of the casualties reportedly occurred when an Israeli attack helicopter fired on the gunmen as nearby residents attempted to find cover.

During the operation, the Israeli troops also bulldozed three houses that the Israeli army says were being used by Palestinian gunmen to fire on them.

The Israeli army also claims its troops came under attack from Palestinian militants who hurled grenades and fired anti-tank missiles.

Israeli officials claim that the Palestinians are attempting to smuggle advanced weaponry from Egypt never used by them before in the current conflict.

Among the weapons Israel says the Palestinians are seeking to acquire are shoulder-mounted anti-aircraft missiles that could shoot down helicopters.

Israel often uses attack helicopters in its operations in Gaza, including attempted assassinations of Palestinian activists.

Experts say the so-called Stinger missiles could also target Israeli jets or civilian aircraft flying over the Gaza Strip.

Israel's military mission to prevent the smuggling of such weapons from Egypt is code-named Operation Root Canal and is expected to last for several days.