The Israeli army has confirmed it fired a mortar round into a Gaza UN shelter where 15 people died on Thursday, but denied killing anyone at the site.

Briefing journalists on the findings of an internal military inquiry into the incident at a UN school in Beit Hanun, spokesman Lieutenant Colonel Peter Lerner said militants "in the vicinity" of the school fired mortar rounds and anti-tank rockets at Israeli forces.

The army responded with mortar fire, sending a stray round into the compound, he said.

"A single errant mortar [round] landed in the courtyard of the school," he said.

"The courtyard was completely empty" at the time of the incident, he added.

"We reject the claims that were made by various officials immediately following the incident, that people were killed in the school premises as a result of [Israeli army] operational activity," he added.

An AFP photographer who went to the scene saw blood spattered on the ground and Gaza emergency services spokesman Ashraf al-Qudra said 15 people died in the blast and at least another 200 people were injured.

"Many have been killed -- including women and children," UN Secretary General Ban Ki-moon said in a statement, adding that he was "appalled".

Lt Col Lerner suggested the victims may have been hit in fighting raging elsewhere and "brought to the compound after injury" for first aid or shelter.

Fighting subsided in Gaza this afternoon after Hamas Islamist militants said they backed a 24-hour humanitarian truce, but there was no sign of any comprehensive deal to end their conflict with Israel.

Hamas said it had endorsed a call by the United Nations for a pause in the fighting in light of the upcoming Muslim holiday of Eid al-Fitr, expected to start in the next couple of days.

Some firing had continued after the time that Hamas had announced it would put its guns aside and Israeli Prime Minister Benjamin Netanyahu questioned the validity of the truce.

"Hamas doesn't even accept its own ceasefire, it's continuing to fire at us as we speak," he said in an interview with CNN, adding that Israel would "take whatever action is necessary to protect our people".

Nonetheless, Gaza residents and Reuters witnesses said Israeli shelling and Hamas missile launches had slowly quietened down through the afternoon.

The lull suggests a de-facto truce might be taking shape as an international efforts to broker a permanent ceasefire appeared to flounder.

However, Israel's military has said it will need more time to destroy a warren of tunnels that criss-cross the Gaza border that it says is one of its main objectives.

Israel and the Hamas Islamists who control Gaza had agreed to a 12-hour ceasefire yesterday to allow Palestinians to stock up on supplies and retrieve bodies from under the rubble.

Mr Netanyahu's cabinet voted to extend the truce until midnight at the request of the United Nations, but called it off when Hamas launched rockets into Israel during the morning.

Palestinian medics said at least ten people had died in the wave of subsequent strikes that swept Gaza, including a Christian woman, Jalila Faraj Ayyad, whose house in Gaza City was struck by an Israeli bomb.

1,060 Palestinians, mainly civilians and including many children, have been killed in the 20-day conflict.

Israel says 43 of its soldiers have died, along with three civilians killed by rocket and mortar fire out of the Mediterranean enclave.

Israel launched its Gaza offensive on 8 July, saying its aim was to halt rocket attacks by Hamas and its allies.

After aerial and naval bombardment failed to quell the outgunned guerrillas, Israel poured ground forces into Gaza ten days later, looking to knock out Hamas's rocket stores and destroy the vast network of tunnels.

The army says its drive to find and eliminate tunnels would continue through any temporary truce.

Diplomatic efforts led by US Secretary of State John Kerry to end the 20-day conflict have shown little sign of progress.

Israel and Hamas have set conditions that appear irreconcilable.

Hamas wants an end to the Israeli-Egyptian economic blockade of Gaza before agreeing to halt hostilities.

Israel has signalled it could make concessions toward that end, but only if Gaza's militant groups are stripped of their weapons.

"Hamas must be permanently stripped of its missiles and tunnels in a supervised manner," Economy Minister Naftali Bennett said.

"In return we will agree to a host of economic alleviations," the security cabinet member said on Facebook.

Mr Kerry flew back to Washington overnight after spending most of the week in Egypt trying to bridge the divide, putting forward some written proposals to Israel on Friday.

Speaking off the record, cabinet ministers described his plan as "a disaster", saying it met all Hamas demands, such as lifting the Israeli-Egyptian blockade completely and ignored Israeli terms, such as stripping Hamas of its rockets.

There was no immediate comment from US officials.

The obvious rancour added yet another difficult chapter to the already strained relations between Mr Netanyahu and Mr Kerry, whose energetic drive to broker a definitive peace deal between Israel and the Palestinians ended in acrimony in April.

The main UN agency in Gaza, UNRWA, said 167,269 displaced Palestinians have taken shelter in the organisation's schools and buildings, following repeated calls by Israel for civilians to evacuate whole neighbourhoods ahead of military operations.

During the lull in fighting inside Gaza yesterday, residents flooded into the streets to discover scenes of massive destruction in some areas, including Beit Hanoun in the north and Shejaia in the east.

An Israeli official said the army hoped the widespread desolation would persuade Gazans to put pressure on Hamas to stop the fighting for fear of yet more devastation.

The Israeli military says its forces have uncovered more than 30 tunnels in Gaza, with some of the burrows reaching into Israeli territory and designed to launch surprise attacks on Jewish communities along the border.

The military said today it found a tunnel that led directly into the dining room of an Israeli kibbutz.

Other underground passages, the military says, serve as weapons caches and Hamas bunkers.

One official said troops had found it easier to operate during the truce as the immediate threat to their safety was diminished.

The Gaza turmoil has stoked tensions amongst Palestinians in mainly Arab East Jerusalem and the occupied West Bank.

Medics said eight Palestinians were killed on Friday in incidents near the West Bank cities of Nablus and Hebron.

The violence has sparked protests outside the region.

Demonstrators in London marched from the Israeli embassy to the House of Parliament in Whitehall, blocking traffic throughout the West End.

French police clashed with pro-Palestinian protesters who defied a ban by authorities to march in central Paris.

A rally took place at the Israeli Embassy in Dublin this afternoon to express solidarity with the people of Israel.

Organisers said members of the public travelled from across Ireland to call for Hamas to cease rocket attacks against Israeli civilians.

Elsewhere, people queued at the Mission of Palestine in Blackrock, Co Dublin today to sign a book of condolences and to express their concerns about the ongoing crisis in Gaza.