"Our munition alone could not have ignited a fire of this size," military spokesman Rear Admiral Daniel Hagari said in a press briefing on the preliminary findings of an army probe into Sunday night's deadly inferno that drew international condemnation.

Israel's military said it had targeted and killed two senior Hamas militants in northwest Rafah in the strike, which sparked a blaze that tore through an encampment full of displaced Palestinians.

Prime Minister Benjamin Netanyahu on Monday called it "a tragic accident".

Hagari told reporters the army had gathered "precise intelligence" before the strike, including aerial surveillance, as part of an effort to "minimise civilian harm".

The strike targeted a compound "outside the area that we designated as a humanitarian area".

Hagari was referring to an area in Al-Mawasi that the army had ordered people in Rafah to go to when it launched its ground assault on the city.

Aircraft dropped two 17-kilogramme munitions on the target, he said, adding that was the smallest-sized munition that Israeli jets can use.

"We know that in the compound that we attacked there were only Hamas members," he said.

Hagari said the cause of the fire following the strike was still undetermined.

"We are looking into all possibilities, including the option that weapons stored in a compound next to our target... may have ignited as a result of the strike."

The spokesman aired a recording of a phone call he said Israeli intelligence had intercepted, which raised "the possibility that weapons stored in a nearby compound caught fire".

He also showed satellite imagery that he said showed Hamas rocket launchers about 40 metres (yards) from the structure that had been targeted in the strike.

"Despite our efforts to minimise civilian casualties, the fire that broke out was unexpected and unintended," he said.

Hagari pledged that the army would carry out a "swift, comprehensive and transparent" investigation.

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ADMIRAL GROUP