Hamas chief Ismail Haniyeh (left) arrives for a meeting in Doha, Qatar. File/Reuters

Hamas chief Ismail Haniyeh blamed Israelis on Wednesday for the current deadlock, saying their amendments on the Gaza ceasefire proposal introduced by mediators led the negotiation into a stalemate.

He rejected any post-war settlement in Gaza that excludes the group, adding the group sticks to its demands that a ceasefire agreement should end the war in the besieged enclave.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu on Wednesday insisted there was no "humanitarian catastrophe" in Rafah, even as hundreds of thousands fled the south Gaza city amid intense fighting.

It came as Palestinians commemorated the 76th anniversary of the "Nakba", when around 760,000 Palestinians fled or were driven from their homes during the 1948 wartime creation of Israel.

Israeli forces have battled and bombed Hamas fighters in and around Gaza's far-southern city of Rafah, but clashes have also flared again in northern and central areas which Israeli troops first entered months ago.

Palestinians, who had taken refuge in Rafah, leave the city to return to Khan Yunis. File/AFP

The upsurge in urban combat in besieged Gaza has fuelled US warnings that Israel risks being bogged down in a counterinsurgency operation for years.

But despite previous threats by US President Joe Biden to withhold some arms deliveries over Netanyahu's insistence on attacking Rafah, his administration informed Congress on Tuesday of a new $1 billion weapons package for Israel, official sources told AFP.

The European Union urged Israel to end its military operation in Rafah "immediately", warning failure to do so would "inevitably put a heavy strain" on ties with the bloc.

But even as he announced that hundreds of thousands had been "evacuated", Netanyahu insisted there was no humanitarian crisis in Rafah.

"Our responsible efforts are bearing fruit. So far, in Rafah, close to half a million people have been evacuated from the combat zones. The humanitarian catastrophe that was spoken about did not materialise, nor will it," he said.

The United Nations agency for Palestinian refugees, UNWRA, meanwhile said "600K people have fled Rafah since military operations intensified".

Agencies