Israel's army has begun flooding Hamas's network of tunnels as intense fighting rages in Gaza, with the UN warning of the potential "collapse of the humanitarian system" in the territory after a funding row hit its Palestinian aid agency.

The epicentre of the fighting in recent weeks has been Khan Yunis, southern Gaza's main city, where vast areas have been reduced to a muddy wasteland of bombed-out buildings, and where an AFP journalist witnessed people leaving town on Tuesday as explosions sounded nearby.

"We left the Nasser hospital without any mattresses, under tank and air strikes. We didn't know where to go," said one young woman.

"We're out in the cold, left to fend for ourselves, with no tents and nothing to survive on."

Elsewhere in the city, Israeli troops gave journalists a tour of a tunnel they said had been used as a Hamas command centre, as reported by GulfNews.

"Every war has its own characteristics, and I think that this war, its basic character is about that over- and underground manoeuvre," Dan Goldfus, commander of the 98th Paratroopers Division, told reporters outside of the shaft.

"I think the enemy is on the run and is trying to put itself under the civilians as much as it can," he added.

"We left the Nasser hospital without any mattresses, under tank and air strikes. We didn't know where to go," said one young woman.

"We're out in the cold, left to fend for ourselves, with no tents and nothing to survive on."

Elsewhere in the city, Israeli troops gave journalists a tour of a tunnel they said had been used as a Hamas command centre.

"Every war has its own characteristics, and I think that this war, its basic character is about that over- and underground manoeuvre," Dan Goldfus, commander of the 98th Paratroopers Division, told reporters outside of the shaft.

"I think the enemy is on the run and is trying to put itself under the civilians as much as it can," he added.