Two Palestinian women were killed by Israeli fire on Friday after hundreds of women answered a call for human shields to protect gunmen holed up in a Gaza mosque, news agencies reported.

The women's presence outside the mosque allowed the gunmen to escape, ending a 19-hour standoff with Israeli soldiers in tanks and armoured personnel carriers.

Paramedics assist an injured protester in northern Gaza on Friday. Palestinian women acted as human shields for the militants.
(CBC)

Two women were killed and at least 10 were wounded, while at least two gunmen fled in the guise of veiled women in the town of Beit Hanoun.

"What is happening is a plan to destroy the Palestinian people," said Hamas Prime Minister Ismail Haniyeh.

The Israeli army said troops spotted militants hiding among the women and opened fire.

Israeli government spokesman Mark Regev said there would be an investigation.

"The standing orders of the Israeli army are clearly, you do not target innocent civilians," said Regev.

Regev added there were reports that gunfire had come from the crowd outside the mosque.

Israeli forces had seized Beit Hanoun on Wednesday in a bid to stop militants from firing crude rockets at nearby Israeli towns.

In all, 35 Palestinians have been killed in Gaza since Wednesday, including 17 on Friday.

The incursion is the biggest in some time and the fighting has been fierce, the CBC's Peter Armstrong reported from Jerusalem.

The mosque became the focus of the fighting when the gunmen — most thought to be from the military wing of Hamas — took refuge there Thursday. Israeli troops surrounded the building and an exchange of fire began.

Mosque ceiling collapses

Pressing the gunmen to surrender, soldiers threw stun and smoke grenades and knocked down an outer wall of the mosque with a bulldozer, causing the ceiling to collapse.

By mid-morning Friday, a large group of veiled women had gathered outside the mosque. The Israeli army said the gunmen were able to escape because there weren't enough soldiers to block the women from approaching the building and troops didn't want to shoot into the crowd.

The army said it targeted Beit Hanoun as a major staging ground for rocket attacks. However, the militants have continued to fire rockets, including two that landed in southern Israel on Friday, slightly wounding two people.

Among those killed Friday were the two women protesters, a 16-year-old boy, two medics and at least 10 militants, the Associated Press reported. Most of the deaths Friday were a result of a series of Israeli air strikes after sundown. In the deadliest incident, five Palestinians were killed in an Israeli strike in the Jebaliya refugee camp.

Hamas said in a statement Friday they would respond to the attacks "blood for blood."

With files from the Associated Press