One Palestinian was killed and four others wounded in a series of Israeli air strikes in the northern industrial zone of Bait Hanun, medics said on Tuesday.
The Israeli military confirmed an air raid in the Bait Hanun area of northern Gaza, the site of two earlier strikes on Tuesday.
The dead man was named Ahmed Shahid, who was struck by a missile fired towards a car, the sources said.
Israeli aircraft also carried out two overnight air strikes against a bridge in the northern Gaza Strip and against a "gunman" west of the Karni transit point for goods entering and leaving the Palestinian territory, a spokesman said.
Ground troops are massed on the eastern and northern border of the impoverished territory - one of the most densely populated areas on earth - and are also stationed east of Gaza City and in the south near a defunct airport.
Israel says the massive operation is to secure the release of a captured soldier on June 25, and halting Palestinian rocket attacks.
Palestinian medics said on Tuesday that patients treated in Shifa hospital in Gaza and bodies at the mortuary presented unusual burns, raising concerns that Israel was using chemical weapons.
Meanwhile, Israeli defence sources said the government had given the military the green light to continue and, if necessary, intensify the so-called Summer Rain offensive with infantry and armour poised to carry out "in depth" incursions.
The approval was granted during consultations late on Monday between Ehud Olmert, the Israeli prime minister, and the defence minister, Amir Peretz, who faced their biggest test since the new Israeli government took office on May 4.
Olmert is due to hold talks with military commanders on Tuesday with a view to continuing the offensive, the largest operation since Israel pulled out of the Gaza Strip in September.
In Shifa hospital, Dr al-Saqqa said most of the dead bodies taken to the facility were torn apart and completely burnt.
"Even bodies of the injured have been almost completely burnt. They have been deformed in a very ugly way that we have never seen before," he told Aljazeera channel.
Al-Saqaa, who heads the hospital's emergency service, said relatives had been unable to identify the dead victims.
"When we try to X-ray dead bodies, we find no trace of the shrapnel that hit the person killed," he said, adding that the bodies seemed to have been chemically burnt.
"We are sure that Israel is using a new chemical or radioactive weapon in the new operation. More than 25% of the injured are children, aged under 16."
Four teenagers playing football were among the dead on Monday.
At least 51 Palestinians have been killed since the operation started two weeks ago. An Israeli soldier also died as a result of "friendly fire", according to the Israeli military.
No end in sight
On Monday, Khaled Meshaal, the political leader of Hamas, demanded a prisoner swap for freeing the captured soldier but Olmert said that would be a "major mistake".
Hamas's armed wing - along with two other militant groups, the Popular Resistance Committees and the Army of Islam -claims to be holding the soldier.
Olmert has rejected international accusations that the response to the soldier's capture was disproportionate, saying that Israel's pullout from Gaza after 38 years of occupation has been followed only by continued violence.
Aid groups have expressed concern about the difficulties of providing assistance to 1.4 million people living in Gaza after months of financial difficulties and the suspension of direct Western aid to the Hamas-led government.
Junichiro Koizumi, the Japanese prime minister, is due to arrive in the region on Tuesday for separate talks with Olmert and the Mahmoud Abbas, the Palestinian president, on a trip he hopes will help to calm the situation.