An 11-year-old boy and his 15-year-old sister were among the latest victims to be shot and killed on Tuesday.
Ahmad Muhammad al-Mughayir and his sister Asma were hit in the head as they were playing in their family's home in Tul al-Sultan area of Rafah refugee camp, medical sources and witnesses said.
Another Palestinian who had been seriously wounded after being shot by Israeli troops in the early morning also died of his injuries.
The latest deaths raised to at least 19 the number of Palestinians killed since the start of the Israeli operation in the flashpoint area early on Tuesday.
One Palestinian was apparently killed while planting a bomb which malfunctioned.
Palestinian President Yasir Arafat has described Israel's attacks on Rafah as "a large massacre" and called for international intervention to halt the operation.
Commenting on the onslaught US President George Bush said renewed violence in the Gaza Strip was "troubling" while reaffirming his belief Israel had a right to target resistance fighters.
The "unfolding violence in the Gaza Strip is troubling," Bush
Palestinians mourn the death
of their loved ones
said in a speech to the American Israel Public Affairs Committee, a powerful pro-Israel group.
The president renewed his call for the creation of an independent Palestinian state living at peace with Israel, but
warned that for that to happen "all parties must renounce violence and denounce terror".
"The US is strongly committed and I am strongly committed to the security of Israel as a vibrant Jewish state. Israel is a democracy and a friend and has every right to defend itself from terror," he said.
No time limit
Meanwhile, Israel has set no time limit on its operation in the southern Gaza refugee camp of Rafah, Defence Minister Shaul Mofaz said.
"We have not fixed any time limit for this operation ... which will last for as long as it takes," Mofaz told public radio.
"The US is strongly committed and I am strongly committed to the security of Israel as a vibrant Jewish state"
"The pursuit of this operation will depend on the results" on the ground, the hawkish minister added.
He said Operation Rainbow was not aimed at destroying houses, but was rather designed to put an end to the smuggling of weapons through tunnels underneath the border with Egypt.