Israeli Prime Minister Benjamin Netanyahu has warned Palestinian civilians on Sunday to leave immediately any site where militants are operating.
The call came one day after Israel took the Gaza war to a new level by flattening a 13-storey apartment tower, Reuters reported.
Israeli aircraft first fired a non-explosive rocket at the building, a sign to residents to get out, before attacking it on Saturday.
Seventeen people were wounded in the strike on the structure, which Israel said had housed a Hamas command centre.
"I call on the inhabitants of Gaza to evacuate immediately from every site from which Hamas is carrying out terrorist activity. Every one of these places is a target for us," Netanyahu said at a cabinet meeting.
With no end in sight to fighting now in its seventh week, Netanyahu's tough talk could indicate a move towards bolder strikes in densely populated neighbourhoods, even at the risk of raising more international alarm.
Israel said Hamas bears responsibility for civilian casualties because it operates among non-combatants.
The group, it said, uses schools and mosques to store weapons and as launching sites for cross-border rocket attacks.
Meanwhile, Israeli military told Associate Press that Gaza militants continued to fire rockets and mortar shells at Israel, including at least 10 on Sunday.
That was in addition to more than 100 on Saturday, most aimed at southern Israel.
The UN said about three-fourths of the Palestinians killed have been civilians.
Since the fighting began, Israel has launched some 5,000 air-strikes at Gaza, while Gaza militants have fired close to 4,000 rockets and mortars, according to the Israeli military.
More than 2,100 Palestinians, including about 500 children, have been killed, according to Palestinian health officials and UN figures.
