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Smoke caused by explosions from Israeli attacks rises from buildings on the outskirts of Gaza City on Tuesday. ((Hatem Moussa/Associated Press))

Egypt and France brought forth a new ceasefire proposal late Tuesday aimed at ending fierce fighting between Israel and Hamas in Gaza and Palestinian militant rocket attacks on the Jewish state, an offer Israel's UN ambassador said her country is taking "very seriously."

Gabriela Shalev's comments came as Israel agreed to open a supply corridor to move humanitarian supplies into Gaza, just hours after at least 30 Palestinians at a United Nations school being used as a shelter were killed by Israeli tank fire.

A statement from Israeli Prime Minister Ehud Olmert's office late Tuesday said Israel would suspend attacks in certain areas so food, fuel and medical supplies can cross into the Gaza Strip. There's no word yet on when or where the corridor will open.

Israel said it is looking into Tuesday's incident at the al-Fakhora school in Jebaliyah. An Israeli official said the country's soldiers came under mortar fire from the courtyard of the school.

John Ging, director of operations in Gaza for the United Nations Relief and Works Agency (UNRWA), said at least 55 people were also injured at the school.

Ging's colleague, agency spokesperson Christopher Gunness, told the BBC that 15 of those injured are in critical condition.

Ging, who spoke to reporters in New York via video conference from Gaza, said UNRWA regularly provides the Israeli army with GPS co-ordinates of its facilities, including the school.

"Of course, it was entirely inevitable if artillery shells landed in that area there would be a high number of casualties," he said.

Gunness called for an investigation into the incident.

"We are rooting our response very firmly in international humanitarian law. We are saying there must be an independent investigation and the facts must speak for themselves," he said.

The death toll in Gaza since the Israeli assault began Dec. 27 is now believed to be almost 600, with more than 2,500 Palestinians wounded, according to Gaza health officials and UN estimates.

Since Israel won't allow foreign journalists into Gaza, information is coming from other sources in the area.

Abbas calls for Security Council to end 'genocide'

In New York, the United Nations Security Council convened to discuss calling for an end to the conflict, but the session ended late Tuesday without a vote on any draft statement or resolution.

UN Secretary General Ban Ki-moon called for an immediate end to fighting and urged council members to move "swiftly and decisively to put this crisis to an end."

Earlier in the evening, Palestinian President Mahmoud Abbas had asked the council for a resolution that calls for an immediate cessation of Israel's military campaign, which he labelled "genocide."

"The entire world opinion will accept no less than an urgent intervention by the Security Council to stop the fighting and deter the aggressor," Abbas told council members.

Abbas and U.S. Secretary of State Condoleezza Rice announced their support for a plan Egyptian President Hosni Mubarak presented earlier in the day to French President Nicolas Sarkozy, who is also the current Security Council president.

"We need urgently to conclude a ceasefire that can endure and that can bring real security," Rice told council members on Tuesday.

"In this regard we are pleased by and wish to commend the statement of the president of Egypt and to follow up on that initiative."

Hamas 'has no interest in making peace'

Israel's Shalev, who spoke to the council after Abbas, initially did not mention the ceasefire proposal, but defended Israel's military campaign and said Israel must ensure "the end of terrorism in Gaza."

"We have to defend ourselves," she told the council, while adding Hamas hides among the civilian population of Gaza and "has no interest in making peace."

She then told reporters outside the assembly that she was "sure" that the proposal would be considered by the Israeli government.

"But we take it very, very seriously," she said.

There hasn't been any response from Hamas on the fresh proposal, which reportedly calls for an immediate ceasefire to be followed by talks on long-term border arrangements and an end to the blockade of Gaza.

Throughout the day, Arab countries were floating a revised UN resolution calling for an immediate end to all military action, as well as the deployment of an international observer force to monitor a ceasefire and protect Palestinian civilians in Gaza.

The Egyptian-French proposal reportedly does not include a call for an international observer force.

The U.S. and British ambassadors to the UN have said a draft resolution circulated by Libya, the only Arab nation currently sitting on the 15-member Security Council, needs to be amended because it doesn't mention the continuing Hamas rocket attacks on Israel that sparked the Israeli military campaign.

Israel to 'keep the pressure up'

Meanwhile on Tuesday, Sarkozy also asked Syria to help persuade Hamas to co-operate in international efforts to end the conflict.

But Syrian President Bashar al-Assad called Israel's military campaign a "war crime" and said it will only lead to more violence in the region.

Israel has vowed the offensive will not end until Hamas ends its rocket attacks against southern Israel.

Mark Regev, a spokesman for Israeli Prime Minister Ehud Olmert, said Israel will not agree to a Band-Aid solution that does not address Hamas rocket attacks or provides time to regroup.

"We will continue to keep the pressure up on Hamas," Regev said. "We don't want to give them time to rest and regroup and rearm."

'Deeply dismayed': UN chief

As of Tuesday, about 14,000 Palestinians in Gaza are using 23 UNRWA schools for shelter, Gunness said.

UN Secretary General Ban Ki-moon said he is "deeply dismayed" the attacks happened near schools.

"These attacks by Israeli military forces which endanger UN facilities acting as places of refuge are totally unacceptable and must not be repeated," Ban said in a release.

"Equally unacceptable are any actions by militants which endanger the Palestinian civilian population."

U.S. president-elect Barack Obama made his first comments on the Gaza violence Tuesday, saying the loss of Israeli and Palestinian lives is "of deep concern."

Obama, who maintains only U.S. President George W. Bush can speak for the U.S., said he would have more to say on the matter after he takes office on Jan. 20.

Hand-to-hand combat reported

Meanwhile, Israeli shells continued to slam into the Gaza Strip on Tuesday after a night of fierce fighting that reportedly included hand-to-hand combat and gun battles.

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Palestinians who fled their homes amid Israeli attacks gather in a United Nations Relief and Works Agency facility at a school building in Shati refugee camp in Gaza City on Tuesday. ((Hatem Moussa/Associated Press))

"There's nowhere safe in Gaza. Everyone here is terrorized and traumatized," said the UN's Ging, who blamed the international community for allowing the violence to continue.

According to UN humanitarian chief John Holmes, at least 500 people have been killed in Gaza and as many as 25 per cent are believed to be civilians.

Maj. Avital Leibovich said Israel is not purposely targeting civilians but Hamas has chosen to put people in harm's way by placing their weapons and bases in densely populated areas.

Nine Israelis have been reported dead since the offensive began, including six soldiers. Four of the soldiers reportedly died in friendly-fire incidents Monday.

About 130 Hamas fighters have been killed since ground troops entered the region on Saturday, said officials with the Israeli army.

Attacks widen

Israel encircled Gaza City and widened its attacks Tuesday to include Khan Younis in the south.

Israeli forces cut the main Gaza highway in several places, compartmentalizing the strip into the north, south and Gaza City itself, preventing movement between them. Israel also took over high-rise buildings in Gaza City and attacked dozens of smuggling tunnels.

Hamas fired at least 15 rockets at Israel Tuesday. An infant was reported injured after a rocket landed in the Israeli town of Gadera, about 40 kilometres from the Gaza border.

Many Gazans are without electricity or running water and thousands have been displaced from their homes.

The Red Cross said Tuesday the situation in Gaza has grown into a "full-blown" humanitarian crisis.

The few remaining power supplies could collapse at any moment, leaving 500,000 people without clean water and at risk of disease, said Pierre Kraehenbuehl, head of Red Cross operations.

Hospitals are overcrowded and the UN is urging that patients be allowed to be taken out of Gaza.

Hallways are being used as emergency rooms and the proper materials and medications to treat patients are becoming scarce.

The ground movements of Israeli troops are making it nearly impossible for aid organizations to function in Gaza, said Al-Jazeera reporter Ayman Mohyeldin, who is one of the few foreign journalists still inside Gaza.

The Red Cross said it has been unable to reach people in dire need of help, while health officials have estimated at least six paramedics have been killed since the offensive began.

Mouttazz AbuRamadan, a Canadian trapped in Gaza, said there's a lot of destruction around where he lives. The presidential palace has been bombed and the port is almost destroyed, he said.

"You try your best to stay indoors and not go out during the incursions, but the problem is, the incursions — the bombings in particular — the F16s, the Apache helicopters, the unmanned drones … they’re relentless. They’re firing everywhere," he said.

"The best thing you can do is stay indoors, but you need to go out and buy food and candles."

'Political failure'

More refugees are expected to join the 14,000 who have already fled from the frontlines, according to United Nations officials.

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A Palestinian boy inspects the rubble at a building in Rafah refugee camp, southern Gaza Strip, following Israeli attacks Tuesday. ((Eyad Baba/Associated Press))

"I am appealing to political leaders here and in the region and the world to get their act together and stop this," Ging said, speaking at Gaza's largest hospital.

"They are responsible for these deaths. It's their responsibility. This is the result of political failure. They are responsible for these deaths."

European officials said Tuesday they are concerned that the conflict in Gaza may be spilling over into their countries.

Two cars packed with gasoline bombs exploded outside a synagogue in France's southern city of Toulouse on Monday night.

Sweden, Britain and Denmark were also reporting attacks allegedly connected to growing tensions concerning Gaza.

Al-Qaeda's second-in-command, Ayman al-Zawahri, called on Muslims to strike Israeli and Western targets around the world, while Venezuela's Foreign Ministry said Tuesday it had expelled the Israeli ambassador because of the attacks.

With files from the Associated Press