"Its repeated use in this manner, despite evidence of its indiscriminate effects and its toll on civilians, is a war crime," she said.
The use of white phosphorus is not prohibited under international law, but the indiscriminate use of any weapon in an area crowded with civilians could be used as the basis to make war crimes charges, legal experts have said.
Israel said last week that all weapons used during its three-week campaign in Gaza complied with international law, but said it would carry out an internal investigation following Amnesty's accusations.
"In response to the claims ... relating to the use of phosphorus weapons, and in order to remove any ambiguity, an investigative team has been established in southern command to look into the issue," the Israeli army said.
Amnesty's accusations are made on the basis of an on-the-ground study by Chris Cobb-Smith, a British weapons expert who visited Gaza as part of a four-person Amnesty team following the start of a ceasefire on Sunday.
Cobb-Smith said he had found widespread evidence of the use of the incendiary material.
"We saw streets and alleyways littered with evidence of the use of white phosphorus, including still-burning wedges and the remnants of the shells and canisters fired by the Israeli army," he said in a statement.
"White phosphorus is a weapon intended to provide a smokescreen for troop movements on the battlefield. It is highly incendiary, air burst and its spread effect is such that it should never be used on civilian areas."
When white phosphorous lands on skin it burns through muscle and into the bone, continuing to burn unless deprived of oxygen.
Amnesty said that one of the places worst-affected by the use of white phosphorous munitions was the UN Relief and Works Agency compound in Gaza, which Israel shelled on January 15.
In another incident on the same day, a white phosphorus shell landed in the al-Quds hospital in Gaza City, causing a fire and forcing hospital staff to evacuate patients.
At the time, the UN had accused Israel of using white phosphorus, but the Israeli army refused to comment.
Israel faces potential claims in international courts for its actions in Gaza, where it launched an offensive against Hamas on December 27 with the stated aim of stopping the Palestinian group from firing rockets into Israel.
Tzipi Livni, Israel's foreign minister, said on Monday that she was "at peace" with the actions Israel had taken during the conflict.