Offensive to broaden
Despite the onslaught in Gaza, eight rockets were fired from the territory into southern Israel on Wednesday.
Ehud Olmert, the Israeli prime minister, chaired the security cabinet meeting in Jerusalem which "approved continuing the ground offensive, including a third stage that would broaden it by pushing deeper into populated areas," a senior defence official said.
The final decision would be left to Ehud Barak, the Israeli defence minister, the official added.
Israel warned thousands of people in the Rafah zone on the Egyptian border to leave their houses ahead of planned air raids on Thursday.
"You have until 8am [06:00 GMT]," said leaflets which were dropped by the Israeli military.
Witnesses said that a house and a suspected smuggling tunnel were hit in two raids early on Thursday.
At least 700 Palestinians, including 219 children, have died in Gaza since Israel began its assault on December 27. More than 3,080 people have also been wounded.
Seven Israeli soldiers and three civilians have died in the same period.
Soon after the three-hour lull on Wednesday, an Israeli air raid on a car in Beit Lahia, near Gaza's northern border with Israel, killed three children and their father, who was described as a civilian by medical workers in the besieged strip.
Palestinians and aid workers in and around Gaza City had used Wednesday's brief respite to recover dead bodies, treat the wounded, and gather much-needed supplies in and around Gaza City.
|The military announced a three-hour lull in fighting to open a 'humanitarian corridor' [AFP]
Peter Lerner, an Israeli military spokesman, announced "offensive" military action across the strip would be suspended for three hours every alternating day, although the timings may vary.
Despite this, Israeli air raids were reported in other parts of the Palestinian territory during Wednesday's announced timeframe of 1pm-4pm.
Most of Wednesday's clashes occurred in northern Gaza, with explosions reported in Jabalya and Beit Lahia.
In Gaza City, four people were killed and seven injured outside a mosque in the Sheik Radwan neighbourhood.
Two people were also killed earlier when the Zeitoun district was targeted from the air.
Further south, air raids hit the towns of Khan Yunis and Rafah, where over 20 houses were destroyed.
Around 15,000 Palestinians have had to flee the fighting so far, but have found few places safe, with even schools converted into UN shelters being hit.
An Israeli attack on a school run by the UN Relief and Works Agency in the northern town of Jabaliya on Tuesday left 43 Palestinians dead and around 100 wounded.
Israeli officials said missiles were fired from the UN building and that their troops were simply returning fire.
Heba, a Gaza resident and mother of two, told Al Jazeera there was no place left in Gaza that could be considered safe.
"What happened in the school was a hugely offensive and inhumane thing. We never expected that people who sought refuge in a UN building would be attacked and killed," she said.