"The mood in north Gaza this afternoon is very, very tense. This is the first day of very heavy clashes between Israeli forces and Palestinian militants since the Israeli Defence Force began its incursion more than a week ago.

"There have been many more casualties than in previous days. The clashes are taking place between militants and the Israeli troops, tanks and armour who moved overnight into three former Jewish settlements of Dugit, Nisanit and Elei Sinai just inside Palestinian territory near the Erez border crossing.

"After a nervous morning where the two sides seemed more to be staking positions than engaging in close combat, the IDF says that it is now coming under 'constant, heavy gunfire' from Palestinian militants.

"The gunmen are positioned at every crossroads and on top of every roof on the outskirts of the Palestinian towns of of Beit Hanoun, Beit Lahiya and Erez, less than a mile away from the settlements across a sandy patch of desert.

"The area has been completely taken over by Hamas, al-Aqsa, Islamic Jihad and other Palestinian militant groups. Overnight The Times saw hundreds if not thousands of masked, heavily-armed militants taking up strategic positions. They are scattered in groups along the edges of town.

"They were the only people moving around northern Gaza: the streets were otherwise deserted. They are firing anti-tank missiles and rocket-propelled grenades and machine guns at Israeli forces. The Israelis are firing back.

"The Israelis tell me that they have killed six Palestinians that they know of: four gunmen and two men carrying a rocket-propelled grenade, in the hinterland between the old settlements and the northernmost Palestinian towns of Erez and Beit Hanoun.

"I have been to Shifa Hospital this afternoon, the main hospital in Gaza City, where there are hundreds of gunmen, relatives and onlookers gathered around the morgue and the overcrowded wards.

"Dr Jumaa Saqaa, a hospital spokesman, said that they had seen seven dead - all adult males of fighting age - and 19 injured, some very critically and expected to die. They include five children aged 12 to 16.

"Simultaneously, Apache attack helicopters are hovering above the northern coast of Gaza, near where they struck a coastal police station last night. The helicopters are circling over the coast road, firing bursts of machine gun fire into the fields near where Palestinian youths gathered on a hilltop and set fire to tyres and big waste skips. The aim seems to be not to hit them, but to drive them away from the high ground overlooking the abandoned Jewish settlements."

"Out at sea, Israeli gunboats are also believed to be patrolling and firing shots very close to the coast, while unmanned surveillance drones move overhead."