Thirteen Israeli soldiers have been killed in fighting inside Gaza on Sunday, the Israeli army has said, in what was the highest number of troops to die in combat since 2006.

"Over the course of the day, 13 soldiers from the IDF's Golani Brigade were killed in combat in the Gaza Strip," an army statement said.

The deaths occurred as more than 60 Palestinians died in Gaza's Shujayea district under the heaviest barrage of tank shells since Israel launched its ground offensive.

The reports of the Palestinian deaths came as a two-hour humanitarian ceasefire broke down less than an hour after it was announced on Sunday.

Thousands of people fled the Hamas-ruled Gaza Strip as heavy bombardment by the Israeli army continued overnight, with the Palestinian death toll over the last 13 days reaching 410.

The eastern neighbourhoods of Shujayea, al-Shaaf and al-Tuffa were the worst hit. Bodies littered the streets.

In the early afternoon, Israel agreed to observe a two-hour humanitarian ceasefire in Shujayea to allow the evacuation of wounded, but it was broken less than an hour after it was announced.

Israel's military said it resumed combat operations shortly after its forces were shot at shortly after the two-hour truce facilitated by the Red Cross took effect at 1.30pm local time.

Hamas, the Palestinian group, said earlier it would abide by a temporary truce.

Palestinian President Mahmoud Abbass described Israel's actions as "a massacre" and declared three days of mourning.

Al Jazeera's Stefanie Dekker witnessed desperate civilians making their way into Gaza City in the morning.

"While driving into the bureau, we were met by hundreds of people on foot carrying their children, carrying plastic bags filled with whatever belongings they could take with them," she said.

"They couldn't leave during the night."

Dozens of bodies were brought to hospitals from Shujayea on Sunday morning, and more were expected to arrive after ambulances could access the neighbourhoods.

Those killed included senior Hamas leader Khalil al-Hayya's son Osama, his wife Hala and their two children.

A Shujayea resident who reached a hospital told Al Jazeera: "It is a massacre taking place in Shujayea. It is a massacre with the full sense of the word, committed by Israel against innocent civilians, there are no armed men among us, the streets of Shujayea are packed with dead bodies."

Israel says it launched its offensive in response to rockets fired from Gaza, and that it is targeting military installations of Hamas and other armed groups. However, the vast majority of those killed and injured are Palestinian civilians, many of them children.

Israel announced on Saturday that four of its soldiers were killed in combat with Palestinian fighters, bringing the total death toll on the Israeli side to seven.

'Heavy psychological impact'

Waleed, a resident of Gaza's eastern al-Shaaf area, told Al Jazeera that he was terrified and stuck with his family of 18 members in a single room and had nowhere to go while Israeli shelling continued through the night.

"We can hear shells and rockets fall on our streets and homes. They're falling everywhere," he said.

"We have no electricity, everything has been cut off. The Red Cross can't reach the area - it's too dangerous. People are stuck at home. All we hear is shelling."

Mads Gilbert, a Norwegian doctor working at Gaza's al-Shifa hospital, told Al Jazeera that most of the casualties brought there were civilians who suffered shrapnel injuries and amputations.

"It's very disturbing to see the large number of civilians, particularly the children. What is remarkable with the Palestinians in Gaza is the resilience. They don't give up, they stand tall. I'm amazed to see the calm and coherence in the community and in the hospital among the [hospital] staff.

"What [Palestinians] are [saying] is that how can the world accept the Israelis targeting civilians in an area which is completely shut off? There are no shelters, no early warning systems, no sirens. The population is basically completely naked to the enormously strong Israeli military machine."