Israel launched the offensive after Palestinian gunmen killed two soldiers and abducted a third in a cross-border raid last month.
An Israeli army spokeswoman said: “Yes, our forces are out, but it is important to emphasise that operations in Gaza continue.”
Israeli troops remain in southern Gaza, apparently in an attempt to stop the abducted soldier being transferred to neighbouring Egypt.
Fifteen Palestinians have been killed and more than 110 wounded in the latest violence.
Israeli aircraft also dropped leaflets in Arabic warning residents of Gaza to avoid buildings housing Palestinian gunmen or their equipment.
Israel “will strike and destroy every position or building where there are militants, ammunition and military equipment”, the leaflet said.
Israel warned civilians to avoid
The military often drops leaflets warning people of forthcoming attacks.
Officials said that the army was adopting a “new policy” of attacking homes in civilian areas where it claims that weapons such as homemade rockets are secretly stored.
Until now Israeli forces say they have mostly attacked government compounds and open areas that militants were using to fire rockets at Israel.
In Gaza City, about 400 Palestinians carrying Lebanese flags demonstrated in solidarity with the people of Lebanon. They held children on stretchers with fake blood on their faces and held mock funerals for Lebanese civilians killed in the Israeli offensive.
In Nablus in the West Bank, a standoff between troops and gunmen went into its second day, with troops including two tanks surrounding a security compound.
Israeli troops fired steel-coated rubber bullets at Palestinians who demonstrated against the troops, injuring five of them, Palestinian medics said.
About 4,000 Palestinians demonstrated in Nablus in support of Hezbollah calling on its leader, Hassan Nasrallah, to attack Israel with rockets.