"It fired white phosphorus repeatedly over densely populated areas, even when its troops weren't in the area and safer smoke shells were available. As a result, civilians needlessly suffered and died."
HRW urged the UN to examine the use of white phosphorus as part of the world body's investigations into Israel's conduct in Gaza.
It also asked the US to halt all shipments of the munition to Israel until it had investigated whether white phosphorus was used in violation of international law or any arms-transfer agreements.
The Israeli army rejected the HRW claims and said its own investigations had so far proved that the army's use of white phosphorus was for "operational needs only".
"Based on the findings at this stage, it is already possible to conclude that the [army's] use of smoke shells was in accordance with international law," the army said in a statement.
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Israel and the Palestinian territories.
"These shells were used for specific operational needs only and in accord with international humanitarian law."
White phosphorus is designed to be used as a smoke screen in open areas and is used by many countries for that purpose.
However, human rights groups argue that its use in civilian neighbourhoods is illegal.
Chris Cobb-Smith, a security consultant who co-authored an Amnesty International report on the munitions' use, told Al Jazeera: "An important thing to remember about white phosphorus is that it is not an illegal weapons system. It is perfectly legal, but it must be used in the right way.
"It is illegal to fire at humans. It is even illegal to fire this weapons system at enemy troops."
The 71-page HRW report documents evidence of spent shells and white phosphorus found in residential areas, city streets, a hospital and a UN school.
The HRW report said: "Even if intended as an obscurant rather than as a weapon, the IDF's [Israeli Defence Force] repeated firing of air-burst white phosphorus shells from 155mm artillery into densely populated areas was indiscriminate and indicates the commission of war crimes."
Dr Naseph Abu Shaban, head of the burns unit at Gaza's Shifa hospital, told Al Jazeera on Thursday that his staff struggled to cope with the casualties caused by the munition.
|Many Palestinians died or were injured by white phosphorus during the Israeli offensive
"During the war, we received many cases of burns with white phosphorus - even complete families came to us burned to death, some of them charred," he said.
"This white phosphorus continues to burn for hours, it never stops burning until you deprive it of oxygen."
Sherine Tadros, Al Jazeera's correspondent who was in Gaza during the offensive, said she had seen the remains of white phosphorus shells on the ground while filming in the territory.
"I remember one lady who showed me her wound. Taking off her bandages the smoke from her wound was still coming out," she said. "So this is very nasty stuff."
The HRW report said that senior Israeli commanders must have approved what they saw as a pattern or policy in white phosphorus use.
HRW has called for Israeli senior commanders to be held to account and for an international investigation to take place, since an Israeli army inquiry is likely to be neither "thorough" nor "impartial".
Israel originally denied using the munition during its war on the Gaza Strip, which began on December 27 last year, but later announced an internal investigation into its improper use.