The Israeli military told AFP its forces had conducted overnight strikes on "terrorist targets" in the Beit Lahia area, sending Palestinians fleeing, according to AFPTV footage.
Civil defence spokesman Mahmud Bassal told AFP that 34 bodies had been pulled from the rubble of the bombarded five-storey residential building in Beit Lahia, "including children and women", revising an earlier toll of 30 dead.
Seven people were wounded, he said.
AFP images showed men covered in dust scrambling to reach people under the rubble, as some of the bodies were taken away on a donkey-pulled cart.
Other images showed the flattened building with broken concrete and twisted metal sticking out from the ruins, as more bodies covered in blankets lay nearby.
Bassal earlier reported that 59 people were missing.
"The chances of rescuing more wounded are decreasing because of the continuous shooting and artillery shelling," he said.
Israel on October 6 -- nearly a year into its war against Hamas -- began a major air and ground assault in the already ravaged north of the Gaza Strip.
The offensive, which the military said was meant to stop Hamas militants from regrouping, began in Jabalia and then expanded to Beit Lahia.
Reporting "ongoing terrorist activities in the area of Beit Lahia", the military said on Sunday that "overnight, several strikes were conducted on terrorist targets in the area".
It added in a statement that "there have been continuous efforts to evacuate the civilian population from the active war zone".
- Shelling 'all night long' -
The war, triggered by Hamas's October 7, 2023 attack on Israel, has displaced the vast majority of Gaza's 2.4 million people at least once, and residents as well as UN and aid officials have repeatedly warned no area of the besieged territory was safe.
AFPTV images on Sunday showed Palestinians, including young children and elderly people, who fled Beit Lahia, many on foot, carrying their belongings along a main road.
"All night long, shells were fired at us and we couldn't sleep," said one of them, Umm Mohammed al-Debs.
"In the morning, they dropped leaflets on us telling us to leave," she told AFP.
Another Palestinian displaced from Beit Lahia, Mohammed al-Madhoun, said the Israelis "targeted us, so we left".
Hamas accused Israel of committing a "massacre" in Beit Lahia, saying it was part of its "genocidal war and revenge against unarmed civilians".
Palestinian presidency spokesman Nabil Abu Rudeineh, whose administration is based in the Israeli-occupied West Bank, condemned "this continued bloodshed" and said that the United States -- Israel's main military backer -- was "enabling" it.
Abu Rudeineh in a statement also demanded that "the United States force Israel to stop its aggression and comply with international law".
The Palestinian foreign ministry urged the international community to act to "immediately halt these atrocities".
The Hamas-run territory's health ministry said the overall death toll in more than 13 months of war had reached 43,846.
The majority of the dead are civilians, according to ministry figures, which the United Nations considers reliable.
The October 7 attack on Israel that sparked the war resulted in the deaths of 1,206 people, mostly civilians, according to an AFP tally of Israeli official figures.
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