Major General Aharon Haliva said he is still living with that "black day."
For Palestinians in Gaza, Monday was a day of fresh horror. The territory's Civil Defence agency said health workers had uncovered around 200 bodies over the past three days of people killed and buried by Israeli forces at a hospital in Khan Younis city.
Asked for comment, the Israeli military said: "We will come back to you on the matter."
Haliva is the first top Israeli official to step down for failing to prevent the Hamas attack which brought intense scrutiny to Israel's government and military.
"The intelligence division under my command did not live up to the task we were entrusted with," Haliva said in his resignation letter. "I carry that black day with me ever since."
In a sign of the anguish still felt in Israel, families were urged to leave an empty seat at tables to represent a hostage being held in Gaza when the Jewish Passover holiday began on Monday night.
Israel estimates that 129 captives seized by Palestinian militants on October 7 remain in Gaza, including 34 who the military says are dead.
Hamas's attack resulted in the deaths of 1,170 people in Israel, mostly civilians, according to an AFP tally based on Israeli official figures.
'Obliterated'
Israel's retaliatory offensive has killed at least 34,151 people in Gaza, mostly women and children, according to the Hamas-run territory's health ministry.
A United Nations expert on Monday said Gaza's health system has been "completely obliterated."
Israel's military has accused Hamas of using health facilities as command centers and to hold hostages — charges the militants deny.
Intense fighting raged in mid-February in the area of Nasser hospital in southern Gaza's Khan Younis, and Israeli tanks and armoured vehicles surrounded it on March 26.
Civil Defence spokesman Mahmud Bassal told AFP crews "are still recovering bodies from inside Nasser Medical Complex, and since Saturday bodies of nearly 200 martyrs have been retrieved."
Civil Defence on Sunday initially reported that at least 50 bodies of people killed and buried at the hospital had been uncovered.
In early April the World Health Organization said another hospital, Al-Shifa in Gaza City, had been reduced to ashes by an Israeli siege, leaving an "empty shell" containing many bodies.
WHO staff who gained access described corpses only partly buried, their limbs sticking out, and the stench of decomposition.
Israel has meanwhile lashed out at reports that its top ally and military supplier the United States was considering sanctioning the Israeli military's ultra-Orthodox Netzah Yehuda battalion over alleged human rights abuses in the West Bank from before the war.
"At a time when our soldiers are fighting the monsters of terror, the intention to impose a sanction on a unit in the IDF (military) is the height of absurdity and a moral low," Prime Minister Benjamin Netanyahu posted on X.
Artillery fire
To mark the start of Passover, Netanyahu separately posted on X that "our resolve remains unyielding to see all hostages back with their families."
He said the "days ahead will see increased military and diplomatic efforts" to secure their release.
Global opposition has mounted over the civilian toll of Israel's Gaza offensive which has turned vasts areas into rubble and sparked fears of famine.
The UN says "multiple obstacles" continue to impede delivery of urgently needed aid for Gazans desperate for food, water, shelter and medicine.
An independent review group on the main aid agency in the territory, the United Nations Relief and Works Agency, said Monday that the body has "neutrality-related issues."
But it also said Israel had yet to provide evidence for allegations that a significant number of UNRWA staff were in "terrorist" organizations.
The review group was created in January following Israeli allegations that several UNRWA staff were involved in the Hamas attack.
"Most alleged neutrality breaches relate to social media posts" which often follow incidents of violence affecting colleagues or relatives, the review found.
An AFP correspondent late Monday reported intense artillery fire in Beit Lahia and Beit Hanoun, north Gaza.
An air strike hit Gaza City's al-Rimal area, the correspondent said.
The Israeli military earlier Monday said aircraft had targeted "a cell of terrorists posing an immediate threat" to soldiers in central Gaza.
'Bitter' Passover
Doctors at Al-Aqsa Hospital in the central Gaza city of Deir al-Balah told AFP that an Israeli air strike wounded six people.
A mosque in nearby Al-Bureij refugee camp was destroyed in a strike. Images showed multiple levels of the building collapsed in front of a still-standing minaret.
Also in Deir al-Balah, Palestinians made a tent out of a parachute used to airdrop aid off the coast.
"When the parachute fell into the sea, we brought it in a small boat," said Naeem al-Goaan. His sister sleeps in the tent at night, while they use it as a store during the day.
In Jerusalem on Monday, two civilians received minor injuries in a car-ramming attack, with police arresting two suspects who fled the scene on foot.
Israeli hostage supporters and anti-government demonstrators have protested to call for a deal that would free the captives, and for Netanyahu to quit.
As Passover began, they kept up their actions, burning a symbolic Passover table outside Netanyahu's house in the coastal town of Caesarea.
Passover is also known in Hebrew as the "holiday of freedom," but Yael Ben Porat, who joined the demonstration, blamed Netanyahu for the October 7 "disaster" and for failure to negotiate the captives' release.
"This night is only bitter, no freedom," she said.
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