The tank shell incident took place on Thursday near Jabalya's main market, scene of gun battles between occupation soldiers and resistance fighters. Palestinian witnesses said the dead were likely to be civilians and not armed men.
The Israeli army had no immediate comment.
Doctors said they were treating at least 20 people wounded in the explosion, many of whom they said were critically hurt. Several among the wounded are aged between 10 to 18, doctors said. The bodies of the seven dead were blown apart in the explosion. Doctors are trying to identify them.
Earlier, 14 Palestinians were killed and 85 wounded in clashes that took place inside the Jabalya refugee camp when occupation troops stormed it.
Meanwhile, Palestinian fighters killed two Israelis along a strip of road connecting the northern Gaza Jewish settlements of Elei Sinai and Dugit, Israeli radio said.
Sixty-year-old Muhammad al-
Hadal was among the dead
One of those killed was a woman jogging along a road near a Jewish settlement in the northern Gaza Strip, occupation military sources said. The woman's identity was not immediately available.
Israeli soldiers who rushed to the scene returned fire and killed at least one fighter. Earlier, two fighters from the resistance group Hamas struck an Israeli position near the Jabalya refugee camp, killing a soldier before they were shot dead.
Reporting from Gaza, Aljazeera's correspondent Wail Dahduh said the situation is still very tense in view of the continuation of Israeli military operations in the towns of Jabalya and Bait Lahia in northern Gaza.
Israeli forces, backed by military vehicles and bulldozers, advanced to the boundaries of Bloc 4, east of Jabalya refugee camp. Then they started razing vast farms and demolishing parts of houses after driving out their residents, Dahduh reported.
A total of 85 Palestinians were
wounded in the latest incursion
The Israeli forces have set up a high-technology surveillance tower for snipers, who target people appearing in the streets or in the areas that the tower overlooks upon, he said.
The military operation is going on and Palestinians fighters are firing rockers and bullets at Israeli vehicles advancing, Dahduh added.
Witnesses in the camp told Aljazeera.net's correspondent in Gaza, Laila El-Haddad, that power lines were targeted on Wednesday, leaving the entire camp - which houses some 120,000 people - without electricity.
Elsewhere, in the village of Bait Hanun, residents said they are without water and ambulances were being prevented from entering the area. One woman and her children were feared trapped inside their home after Israeli armoured bulldozers partially demolished it with them inside, according to Haddad.
The incursion into Jabalya marked the first time in four years of fighting that Israeli troops pushed deep into the camp. On previous occasions, they had entered outlying neighbourhoods but avoided longer raids.
Dahlan: The Israeli operation will
result in bloodbath on both sides
Earlier on Thursday, Palestinian resistance groups said they had destroyed an Israeli tank and an armoured bulldozer.
Witnesses in Jabalya camp said children were playing with pieces of the destroyed tank, Haddad reported.
Former Gaza security chief Muhammad Dahlan, seen as a key player in running Gaza after an Israeli withdrawal, said in a statement that the Israeli operation "will result in a bloodbath on both sides because the Palestinian people cannot remain silent in the face of this aggression".
The Israeli army stepped up its operations overnight after two Israeli children were killed on Wednesday in a rocket attack in Sderot, near the Gaza border.
On Wednesday, soldiers killed six Palestinians in a raid. They also shot dead a Palestinian boy outside a Jewish settlement in central Gaza, Palestinian medics said.
Houses were demolished in the
Israeli incursion into Jabalya
Against this backdrop of clashes, US Secretary of State Colin Powell said on Wednesday in an exclusive interview with Aljazeera the intifada had not achieved anything for the Palestinians and it was time to stop it.
He said President George Bush wanted a Palestinian state living side by side with Israel.