Desperate patients tried to flee a hospital in Gaza City this morning as it became engulfed in flames after being earlier set on fire by an Israeli tank shell, medics and witnesses said.

In scenes of utter panic, patients who had been wounded in the ongoing war in the territory could be seen trying to struggle from their beds, an AFP photographer at the scene said.

At least three prematurely-born babies were being wheeled out of the hospital in their incubators along with three patients who had been on life-support machines.

The sound of Israeli gunfire could also be heard in the neighbourhood where Al-Quds hospital is situated.

Dozens of families had arrived there at dawn loaded down with babies, toddlers and children after scores of Israeli tanks had roared into the area, sparking furious battles with Palestinian fighters.

During the day a deafening cacophany of tank shells, missiles, artillery, helicopter gunships and automatic rifles filled the air as battles unfolded less than 300 metres from the hospital beneath a thick haze of smoke.

Palestinian fighters met the advancing troops with mortar and anti-tank rockets. Tanks fired shells on the ground and planes hit the area with missiles from above.

Armed Hamas fighters dressed in blue and black uniforms, one of them carrying the green flag of his Islamist movement, ran down a street 100 metres from the hospital, firing Kalashnikov rifles.

As the fighting grew more intense, dozens more families, clutching hurriedly packed bags, had arrived at the hospital and tried to find a spot wherever they could, not knowing the horrors that awaited them.

As the frightened civilians took refuge in the facility, part of the hospital caught fire after an Israeli strike. The blaze was brought under control in the medical area but not in the administrative building.

Officials at the hospital said the blaze had been caused by a phosphorus shell, hampering efforts to extinguish the flames.

The attack put about 500 patients and medical staff at risk, according to the international Red Cross, while a doctor inside said they were trapped.

"The Israelis are bombing and attacking all around the hospital. We can't get out. There's fire, and we're trapped inside. The water has been cut off," French doctor Regis Garrigue told AFP by telephone earlier in the day.

The hospital was hit after around 12 hours of "incessant" bombing, said Dr Garrigue, the president and founder of the French medical aid agency "Help Doctors," was trapped in the building.

The collapse of the entire wing of a building triggered a moment of panic among the sheltering patients and families and sparked the blaze.

"I can't even describe the horror of that moment," Dr Garrigue said.

The events unfolded on the 20th day of the largest Israeli offensive ever launched on Gaza, which saw heavy fighting as Israeli tanks barrelled into the centre of Gaza City.

Around the same time the people took shelter in the hospital, two cameramen for Abu Dhabi television were wounded when an Israeli strike hit a building in Gaza City housing several international and Arab media outlets, witnesses said.

And the UN partially suspended its operations in Gaza after Israeli shells smashed into its compound, setting fire to warehouses holding badly-needed aid.

Meanwhile, Bashar Murad, a doctor and the head of the ambulance services for the Red Crescent, waited helplessly.

"I have three dead bodies at 500 metres, but I can't get to them," he said. "I have numerous wounded less than a kilometre away, but I can't move without authorisation," Dr Murad said.

Before the ambulances can move anywhere, the International Committee of the Red Cross must call the Israeli army and receive a green light, he said.

- AFP