Prime Minister Benjamin Netanyahu's office said the military had been told to come up with a plan to evacuate civilians but aid agencies warned that a military offensive in such a densely populated area could end up killing large numbers of innocent people.
"There is a sense of growing anxiety, growing panic in Rafah because basically people have no idea where to go," said Philippe Lazzarini, the head of the U.N. Palestinian refugee agency UNRWA.
U.S. President Joe Biden said on Thursday Israel's response to the October 7 attacks by Hamas militants was "over the top" and Washington said it would not support any military operation mounted in Rafah without due consideration for civilians.
More than a million people driven southwards by four months of Israeli bombing of Gaza are packed into Rafah and surrounding areas on the coastal enclave's border with Egypt, which has reinforced the frontier, fearing an exodus.
Netanyahu's office said four Hamas battalions were in Rafah and Israel could not achieve its goal of eliminating the Islamist militants while they remained there. Civilians shouldbe evacuated from the combat zone, it said.
"Therefore, Prime Minister Benjamin Netanyahu has ordered the IDF (Israel Defence Forces) and the security establishment to submit to the Cabinet a combined plan for evacuating the population and destroying the battalions." The statement, issued two days after Netanyahu rejected a Hamas ceasefire proposal that also envisaged the release of hostages held by the Palestinian militant group, gave no further details.
Tal Heinrich, a spokesman for Netanyahu, told Fox News that "if Israel's hands are tied by the international community, or if we take the pressure for Hamas actions" it would be "an open invitation for more terrorism worldwide."
The United Nations said Palestinian civilians in Rafah needed to be protected, but there should not be any forced mass displacement, which it said went against international law. "We're extremely worried about the fate of civilians in Rafah," U.N. spokesman Stephane Dujarric said.
'It Crosses All Red Lines," Says Palestinian President
The Palestinian Presidency said what it described as Netanyahu's plans for a military escalation in Rafah aimed to displace the Palestinian people from their land. "Taking this step threatens security and peace in the region and the world. It crosses all red lines," said the office of Mahmoud Abbas, head of the Palestinian Authority that exerts partial self-rule in the Israeli occupied West Bank.
An Israeli official who declined to be named said that Israel would try to organise for people in Rafah, most of whom fled there from the north, to be moved back northwards within Gaza ahead of any military operation there.
Israeli forces have shifted their offensive southwards towards Rafah after initially storming northern Gaza in response to the October 7 rampage in southern Israel by Hamas gunmen who rule the coastal strip.
Doctors and aid workers in Rafah are struggling to supply even basic aid to those sheltering there, many of them penned up against the border fence with Egypt and living in makeshift tents. "No war can be allowed in a gigantic refugee camp," said Jan Egeland, Secretary-General of the Norwegian Refugee Council, warning of a "bloodbath" if Israeli operations expand there.
In a post on the social media platform X, Canadian Foreign Minister Melanie Joly said an Israeli assault on Rafah would put the lives of Palestinians and foreign nationals, including Canadians "in grave danger" and hamper vital aid deliveries.
Gaza Children Acutely Malnourished
Gaza's health ministry said at least 27,947 Palestinians had been confirmed killed in the conflict, 107 of them in the previous 24 hours, and 67,459 injured.
It has said many more could be buried under rubble from Israeli attacks since Hamas militants killed 1,200 people and took 253 hostages in the October 7 attack, according to Israeli tallies.
Almost one in 10 of Gazans under five are now acutely malnourished, according to initial U.N. data from arm measurements that show physical wasting.
The charity ActionAid said some Gazans were eating grass. "Every single person in Gaza is now hungry, and people have just 1.5 to 2 liters of unsafe water per day to meet all their needs," it said.
Hours before Netanyahu's statement, Israeli warplanes carried out new sorties in which Palestinian health officials said at least 15 people had been killed, eight of them in the Rafah area.
"We were sleeping inside and, when the strike hit, were thrown outside. After that, another rocket hit," said Mohammed al-Nahal, an elderly Palestinian standing beside the rubble of a building that had been hit.
"It destroyed the entire home. My daughter was killed. My daughter, her husband, her son, all were martyred."
Biden Criticizes Israel
Israel's military said its forces had been in action in the area of Khan Younis and in northern and central Gaza to eliminate militant cells and destroy militant infrastructure. It says it takes steps to avoid civilian casualties and accuses Hamas militants of hiding among civilians, including at schools, shelters and hospitals. Hamas has denied doing so.
Biden said on Thursday he had been pushing for a deal to pause fighting to allow the release of hostages, increase the amount of humanitarian aid reaching Palestinian civilians, and normalise relations between Israel and Saudi Arabia.
Hamas this week proposed a ceasefire of 4-1/2 months, during which remaining hostages would go free, Israel would withdraw its troops and agreement would be reached on an end to the war.
Netanyahu said Hamas' terms, offered in response to a proposal drawn up by U.S. and Israeli spy chiefs with Qatar and Egypt, were "delusional" and vowed to fight on.
A Hamas official told Reuters on Friday that a delegation from the group had concluded talks with mediators in Cairo and was now waiting for the official Israeli response to its proposal.