Hamas said its fighters were battling Israeli troops in the east of the city, where hundreds of thousands of Palestinians have sought refuge from combat elsewhere in the enclave. Residents said the fighting was still on the outskirts.

Israel has threatened a major assault on Rafah to defeat thousands of Hamas fighters it says are holed up there, but Western nations and the United Nations have warned a full-scale assault on Rafah would be a humanitarian catastrophe.

A senior U.S. official said President Joe Biden’s administration paused a shipment of weapons to Israel last week in an apparent response to the expected Rafah offensive. The White House and Pentagon declined to comment.

This would be the first such delay since the Biden administration offered its full support to Israel after Hamas’ Oct. 7 attack. Washington is Israeli’s closest ally and main weapons supplier.

A senior Israeli official, asking not to be named, said “if we have to fight with our fingernails, then we’ll do what we have to do.” Israel’s army spokesperson said coordination between allies was unmatched and any disagreements were resolved in private.

Israeli forces on Tuesday seized the main border crossing between Gaza and Egypt in Rafah, cutting off a vital route for aid.

Residents said tanks, which had moved in to take control of the crossing, had not entered the built-up areas of the city and gun battles were still outside the city limits.

Armed groups of Hamas, Islamic Jihad and Fatah said in separate statements that gunfights continued in the central Gaza Strip, while residents of northern Gaza reported heavy Israeli tank shelling against eastern areas of Gaza City and districts.

Despite the latest Israeli assault in Rafah and fighting elsewhere in Gaza, the United States said it believes a revised Hamas ceasefire proposal may lead to a break through in the ceasefire impasse, with talks resuming in Cairo on Wednesday.

In Cairo, all five delegations participating in ceasefire talks on Tuesday – Hamas, Israel, the U.S., Egypt and Qatar – reacted positively to the resumption of negotiations, and meetings were expected to continue on Wednesday morning, two Egyptian sources said.

CIA Director Bill Burns was to travel from Cairo to Israel later on Wednesday to meet Israeli Prime Minister Benjamin Netanyahu and Israeli officials, a source familiar with his travel said.

Israel on Monday declared that a three-phase proposal approved by Hamas was unacceptable because terms had been softened.

White House spokesperson John Kirby said Hamas presented a revised proposal, and the new text suggests the remaining gaps can “absolutely be closed.”

According to Hamas officials and an official briefed on the ceasefire talks, the proposal that Hamas approved on Monday included a first phase with a six-week ceasefire, an influx of aid to Gaza, the return of 33 Israeli hostages, alive or dead, and the release by Israel of 30 detained Palestinian children and women for each released Israeli hostage.

‘PANIC AND DESPAIR’

Since the only pause in the conflict so far, a week-long ceasefire in November, the two sides have been blocked by Hamas’ refusal to free more Israeli hostages without a promise of a permanent end to the conflict and Israel’s insistence that it would discuss only a temporary halt.

Israel’s offensive has killed 34,789 Palestinians, most of them civilians, in the conflict, the Gaza Health Ministry said.

The war began when Hamas militants attacked Israel on Oct. 7, killing about 1,200 people and abducting about 250 others, according to Israeli tallies.

Hamas official Osama Hamdan, speaking to reporters in Beirut on Tuesday, warned that if Israel’s military aggression continued in Rafah, there would be no truce agreement.

Israel’s military said it was conducting a limited operation in Rafah to kill fighters and dismantle infrastructure used by Hamas, which runs Gaza. It told civilians to go to an “expanded humanitarian zone” some 20 km (12 miles) away.

Qatar’s Ministry of foreign affairs said on Wednesday that it strongly condemned Israel’s Rafah incursion and called for international intervention to prevent the city from being invaded.

In Geneva, U.N. humanitarian office spokesperson Jens Laerke said “panic and despair” were gripping the people in Rafah.

The impact of an offensive on Rafah will have disastrous effects for over a million people, MSF medical team lead in Gaza Aurélie Godard said on Wednesday.

“Living conditions all over Gaza are already extremely precarious. They will just get worse for people who are being displaced again and will have to live in makeshift tents with extremely limited access to basic necessities such as water.”

Israel was reopening Kerem Shalom crossing on its border with the Gaza Strip on Wednesday, a statement from the Israeli agency in charge of it said, adding aid trucks routed through from Egypt were already undergoing security inspections there.

Israel had closed Kerem Shalom crossing on Sunday after a Palestinian shelling attack nearby killed four soldiers.

(Reporting by Reuters bureaux; Writing by Cynthia Osterman; Editing by Michael Perry and Ros Russell)