Israeli troops and tanks are engaged in fierce fighting in Gaza following the launch of a military ground operation on Thursday night with the initial aim of destroying Hamas tunnels that could be used to launch attacks on Israel.

In a night of sustained bombardment as well as fighting on the ground, Israel suffered its first military casualty of the 11-day war. The dead soldier – named as Eitan Barak, 20 – was possibly killed by so-called friendly fire in the north of Gaza. Two others were injured.

The Palestinian death toll since the start of the conflict passed 274, including at least 28 who were killed overnight, according to health officials in Gaza, with more than 2,000 injured. Israel launched air strikes against more than 100 targets overnight. Unrwa, the UN agency for Palestinian refugees, said the number of displaced Gazans had almost doubled in the past 24 hours with more than 40,000 seeking sanctuary with the UN.

Hamas has warned Israel of "dreadful consequences" of the conflict's escalation. A statement issued by the Palestinian group warned: "We're with you in the field, and we aren't afraid of the ground assault."

The Palestinian president, Mahmoud Abbas, was visiting Turkey on Friday for talks on a ceasefire to halt Israel's ground offensive in the Gaza Strip after meetings on Thursday with the Egyptian president, Abdel Fatah al-Sisi, as well as a senior Hamas official in Cairo.

Turkey, a long-time supporter of the Palestinian Islamist movement, is trying to use its influence to stop the fighting. On Thursday Recep Tayyip Erdoğan lashed out at both the UN and other Muslim countries for not taking action to stop the Israeli offensive against Gaza, which he said amounted to "systematic genocide".

Three branches of the Antez family, about 60 people, were sheltering in a house in Zeytoun when it was struck with an artillery shell shortly after 8.45pm on Thursday evening when the Israeli ground operation began. Three of the family were killed – Abed Ali, 24, Mohammad Ibrahim, 13, and Mohammad Salem, two – and four injured. Three of the exterior walls were destroyed in the blast.

In the wreckage of the home on Friday morning, Salem Antez, 29, Mohammad Salem's father, approached the Guardian with a plastic bag, which he opened to reveal pieces of flesh he was collecting for burial. "This is my son," he said.

The fighting continued on Friday morning and the casualties continued to rise. At the Kamal Adwan hospital in Beit Lahiya, three children from the Musallem family were brought in – Mohammad, 15, Walla, 13 and Ahad, 11. They had been sleeping in the same room in a flat close to the border when an artillery shell hit. Mohammad and Ahad were killed instantly. Walla Musallem died in the ambulance on her way to the hospital.

"It's very dangerous, there is shelling all the time," Mohammad Zaher, an ambulance driver, told the Guardian. He had made between 40 to 50 trips overnight to collect the dead and injured. "There was so much smoke and shelling. I haven't slept in three days."

The Israeli prime minister, Binyamin Netanyahu, and the defence minister, Moshe Ya'alon, instructed the army to be prepared to expand the ground operation. The mobilisation of a further 18,000 reservists was authorised overnight, bringing the total on standby to about 60,000 in addition to those in service.

"In light of Hamas's incessant criminal aggression and dangerous infiltration into Israeli territory, Israel must act to protect its citizens," a statement from the prime minister's office said.

An Israeli soldier stands at the entrance of a tunnel beneath the border between the Gaza Strip and Israel. Photograph: David Buimovitch/AFP/Getty

"Operation Protective Edge will continue until it has achieved its purpose – restoring quiet to the citizens of Israel for an extended period, with significant damage to the infrastructure of Hamas and other terrorist organisations in the Gaza Strip."

An Israel Defence Forces spokesman, Brig Gen Moti Almoz, said: "We are now entering the second part of the operation. We delivered a hard blow to Hamas: we attacked thousands of targets, destroyed infrastructure, hurt operatives. Large ground troops are taking over targets in the Gaza Strip, operating against tunnels and infrastructure."

The US called on Israel to restrict itself to a "precise operation" on the ground in Gaza while stressing its right to defend itself against rocket attacks.

In a statement late on Thursday, the state department said Netanyahu had telephoned the US secretary of state, John Kerry, to explain his decision "to launch an operation to target the threat of further terrorist infiltration through tunnels into Israel".

It continued: "The secretary reaffirmed our strong support for Israel's right to defend itself against terrorist threats emanating from tunnels into Israel and expressed our view that this should be a precise operation to target tunnels, as described in a statement from the Israel Defence Forces."

It said Kerry emphasised the need to "avoid further escalation and to restore the 2012 ceasefire as soon as possible".

The UN secretary general, Ban Ki-moon, accused Israel of ignoring calls for restraint. "I regret that despite my repeated urgings, and those of many regional and world leaders together, an already dangerous conflict has now escalated even further," he said.

Hamas is demanding an end to the seven-year blockade of Gaza by both Israel and Egypt, as well as the release of prisoners held by Israel.

Israeli troops entered the Gaza Strip at 10.30pm local time on Thursday, under massive supporting fire from air, sea and land.

According to Alex Fishman, a military analyst writing in Yedioth Ahronoth: "The tanks, which serve as the heart of the assault force, received an order to open fire at anything that moved. The area and the targets are due to be seized by the morning hours. From here on, [the army] will start to clear the ground, in what could last for several days, depending on political developments."

The initial aim is to destroy tunnels dug by Hamas from Gaza into Israel for the purpose of launching attacks, and to secure and expand the "buffer zone" inside Gaza's perimeter in order to prevent short-range rocket launches into Israel.

However, Hamas is likely to attempt to suck Israeli troops deeper into Gaza, increasing the risk of military casualties.

The escalation of the conflict came on the 10th day of military action, a point at which military leaders may have calculated a limit on what could be achieved by aerial bombardment.

The decision to launch a ground invasion was reportedly taken by the security cabinet on Tuesday night, following Hamas' rejection of a ceasefire proposal tabled by Egypt.

But the discovery of a tunnel on Thursday morning, through which a dozen militants were attempting to reach a kibbutz in southern Israel, is thought to have been a deciding factor to go in.

Israel halted its bombardment for five hours on Thursday to allow people in Gaza to restock with food and cash, and visit relatives.