A flurry of Israeli airstrikes on Tuesday on a refugee camp near Gaza City levelled apartment buildings, leaving craters where they once stood, as ground troops battled Hamas militants across northern Gaza and attacked underground compounds.

Buoyed by the first successful rescue of a captive held by Hamas, Prime Minister Benjamin Netanyahu rejected calls for a ceasefire and again vowed to crush Hamas's ability to govern Gaza or threaten Israel following its bloody October 7 rampage, which ignited the war.

Several hundred thousand Palestinians remain in the northern part of Gaza, where Israeli troops and tanks reportedly have advanced on several sides of Gaza City, the sprawling urban centre.

In the Jabaliya refugee camp on Gaza City's outskirts, at least six airstrikes destroyed a number of apartment blocks in a residential area, the Hamas-run interior ministry said. It reported a large number of casualties but did not immediately provide details.

Footage of the scene from Al-Jazeera TV showed at least four large craters where buildings once stood, amid a large swath of rubble surrounded by partially collapsed structures. Dozens of rescue workers and bystanders dug through the wreckage, searching for survivors beneath the pancaked buildings. A group of young men pulled two children from the upper floors of a damaged apartment block, cradling them as they climbed down.