"Any attack by the occupation army on the city of Rafah would torpedo the exchange negotiations," a leader in the Palestinian militant group told AFP as Benjamin Netanyahu vowed to extend operations.

The Israeli prime minister earlier this week said he had told troops to prepare to go into the city, as part of its aim to destroy Hamas for mounting the deadly attacks on southern Israel.

But he has faced mounting calls not to attack the city on the border with Egypt, which has become the last refuge for Gazans fleeing Israel's relentless bombardment elsewhere in the coastal territory.

Foreign governments, including Israel's main allies the United States, and humanitarian organisations in particular have voiced deep concern about the effect of a push on Rafah on displaced civilians.

Some 1.4 million people -- about half of Gaza's total population -- have crowded into Rafah, with many living outside or in tents and where food, water and medical supplies are increasingly scarce.

In an interview aired on Sunday, Netanyahu told US broadcaster ABC News that those who urged Israel not to go in to Rafah were effectively giving Hamas licence to remain.

Israel was "within reach" of eliminating Hamas's fighting battalions "and we shouldn't stop", he added.

Hamas seized some 250 hostages on October 7, according to an AFP tally based on official Israeli figures. Israel says 132 are still in Gaza but 29 are thought to be dead.

Renewed talks for a pause in the fighting have been held in Cairo, with Hamas open to a ceasefire, including a possible exchange of hostages for women and children held in Israeli prisons.