Apache helicopters hovered overhead early on Wednesday as 25 jeeps stormed into the camp and surrounded several homes, Palestinian security official confirmed.
Occupation forces imposed a curfew on the camp.
Meanwhile, UN Secretary-General Kofi Annan condemned the latest Israeli invasion of the Rafah refugee camp in the occupied Gaza Strip, urging Israel to protect Palestinian civilians.
Ten Palestinians were killed on Tuesday and another 42 injured when Israeli occupation soldiers, tanks and helicopters stormed Rafah, reported our correspondent.
"The Secretary-General reiterates that Israel, as the occupying power, must protect the civilian population and desist from using disproportionate force," said UN chief spokesman Fred Eckhard.
"He strongly urges the government of Israel to refrain from such violent actions and return to peaceful negotiations with its Palestinian partners according to the quartet's road map," he added, referring to the US-backed plan aimed at ending the Palestinian-Israeli conflict.
Annan "strongly condemns" the raid, which had killed and wounded many civilians and destroyed several homes, Eckhard said. Many children were among the wounded, he added.
Many children have been injured
in the invasion
Palestinians said about 20 Israeli tanks rumbled into the refugee camp, drawing fire from resistance fighters. More tanks, firing machine guns, moved in during the day.
Israeli soldiers killed a 50-year-old civilian and two gunmen in the camp, medics said, adding another Palestinian was shot in the stomach and died in a hospital.
A Palestinian policeman was shot near the border post and an onlooker was killed as he watched tanks at his window.
Meanwhile, Israeli soldiers also shot dead a Palestinian late on Tuesday in the occupied West Bank city of Jenin. A dozen army jeeps stormed the outskirts of the city before opening fire on stone-throwers.
And the invasion of the Balata refugee camp in Nablus continued for the seventh night. At least one civilian was injured when occupation soldiers opened fire.
Soldiers also raided the village of Dair Aharaf, near Nablus destroying two homes.