Israel's vow to push ahead with a "powerful" operation in Gaza's Rafah was met with a growing chorus of international condemnation Thursday, with leaders warning against catastrophic consequences for the 1.5 million Palestinians trapped there.

Australia, Canada and New Zealand warned Israel "not to go down this path", issuing a rare joint statement in the latest urgent appeal seeking to avert further mass civilian casualties.

"An expanded military operation would be devastating," they said. "There is simply nowhere else for civilians to go."

Hundreds of thousands of displaced Palestinians have been driven into Gaza's southernmost city by Israel's relentless military campaign, seeking shelter in a sprawling makeshift encampment near the Egypt border.

Despite pressure from foreign governments and aid agencies not to invade, Israel insists it must push into Rafah and eliminate Hamas battalions.

"We will fight until complete victory and this includes a powerful action also in Rafah after we allow the civilian population to leave the battle zones," Prime Minister Benjamin Netanyahu said in a statement on Wednesday.

His threats of an imminent incursion come as mediators race for a truce in the four-month-old war, which has flattened vast swathes of Gaza, displaced most of the territory's population and pushed people to the brink of starvation.

Should the Israeli assault on Rafah go ahead, the risk of atrocities is "serious, real and high", the United Nations' special adviser on the prevention of genocide, Alice Wairimu Nderitu, said Wednesday.

- 'Delusional demands' -

In Cairo, mediators from the United States, Qatar and Egypt are seeking to broker a deal that would suspend fighting and see the release of the roughly 130 hostages still in Gaza in exchange for Palestinian prisoners held by Israel.

"Israel did not receive in Cairo any new proposal of Hamas on the release of our hostages," Netanyahu's office said in a statement following Israeli media reports that the country's delegation was told not to rejoin negotiations until Hamas softens its stance.

While he did not comment directly on the reports, Netanyahu said: "I insist that Hamas drop their delusional demands, and when they drop these demands we can move forward."

On Tuesday, CIA director William Burns joined the talks with David Barnea, head of Israel's Mossad intelligence service, while a Hamas delegation was in Cairo Wednesday.

Palestinian Authority president Mahmud Abbas, who governs the Israeli-occupied West Bank, called on Hamas to "rapidly" agree to a truce and stave off further tragedy for Palestinians.

The US Federal Bureau of Investigation meanwhile revealed that its director, Christopher Wray, had made an unannounced trip to Israel to meet with the country's law enforcement and intelligence agencies.

Wray also met with FBI agents based in Tel Aviv, according to a statement from the bureau.

- Hospitals 'besieged' -

While truce negotiations enter their third day, Israel's military has kept up its bombardment of Gaza.

On Thursday, the Hamas-run ministry of health said 107 people, "mostly women and children," were killed in overnight attacks.

One person was killed and several wounded in shelling on Nasser Hospital's orthopaedics department, it added.

The medical facility, the largest in southern Gaza, has been the site of heavy fighting for weeks.

Doctors Without Borders has condemned the Israeli military's order to evacuate thousands of patients, staff and displaced people from the hospital.

The organisation said its staff are continuing to treat patients there "amid near impossible conditions".

Nurse Mohammed al-Astal told AFP the facility had been "besieged" for a month, with no food or drinking water left.

"At night, tanks opened heavy fire on the hospital and snipers on the roofs of buildings surrounding Nasser Hospital opened fire and killed three displaced people," he said.

The World Health Organization has said it was denied access to the hospital and lost contact with its staff there, while its Palestine representative said most of the organisation's mission requests have been denied since January.

Speaking from Rafah, Rik Peeperkorn said Gaza's hospitals were "completely overwhelmed".

Patients were frequently undergoing unnecessary amputations of limbs that could have been saved under ordinary circumstances, he said.

The United Nations said a week ago there were no fully functioning hospitals left in Gaza, where more than 68,200 people have been wounded according to the latest Gaza health ministry toll.

The ministry says at least 28,576 people, mostly women and children, have been killed during Israel's assault on the Palestinian territory since October 7.

The Hamas attack that launched the war resulted in the deaths of about 1,160 people in Israel, mostly civilians, according to an AFP tally based on official Israeli figures.

- 'War in the north' -

With regional tensions high, the Israeli army said Wednesday that rocket fire from Lebanon killed an Israeli soldier, while Lebanese sources said Israeli strikes had killed nine people, seven of them civilians.

Since the outbreak of the Israel-Hamas war, Hezbollah has traded near-daily fire with Israeli troops, with tens of thousands displaced on both sides.

But the worst single-day civilian death toll in Lebanon since October raised fears of a broader conflict between Israel and militant group Hezbollah.

After meeting commanders near the Lebanese border, Israeli army chief Herzi Halevi said Israel is "now focused on being ready for war in the north".