JEBALIYA REFUGEE CAMP, Gaza Strip (AP) – Israeli troops struck deep inside the largest Palestinian refugee camp yesterday, battling masked gunmen in an unprecedented campaign to stop deadly rocket fire on Israeli towns. Twenty-eight Palestinians were killed and 131 wounded, the highest single-day toll in 30 months.

Three Israelis – two soldiers and an Israeli woman jogger – were killed in two Palestinian shooting attacks in northern Gaza.

After meeting with advisers yesterday evening, Prime Minister Ariel Sharon approved a large-scale military offensive in Gaza, in response to the killing of two Israeli children, ages two and four, by a Hamas rocket the day before. However, he stopped short of ordering a callup of reserves.

The plan, which has the backing of Defence Minister Shaul Mofaz, was expected to be given final approval by the security Cabinet late yesterday. Troops would focus on the Jebaliya refugee camp and the nearby town of Beit Hanoun.

The army’s push into the centre of Jebaliya earlier yesterday – a first in four years of fighting – signalled a change in military tactics.

Since fighting erupted in 2000, the military refrained from reoccupying large areas of crowded Gaza for long periods, for fear of getting bogged down in urban combat. The army has felt less constrained in the less densely populated West Bank.

Armoured vehicles rolled into squalid Jebaliya, a militant stronghold with 106,000 residents, yesterday morning. Throughout the day, masked Palestinians taking cover in camp alleys shot assault rifles – and occasionally anti-tank missiles and grenades – at tanks who responded with machine gun fire. Militants were seen laying explosive charges and unravelling detonation wire.

In the bloodiest incident, a tank fired a shell toward a group of gunmen, killing seven Palestinians and seriously wounding 23, including gunmen and civilians. Many of the wounded lost limbs, and at least four were under the age of 14, doctors said.

The local Kamal Adwan Hospital was overwhelmed by the influx, and doctors had to treat some of the patients on the blood-soaked floor and on cafeteria tables.

Ahmed Salem, 10, said the shell was fired from a tank at a UN school near Jebaliya’s market. “I was hit and fell to the ground. The man lying next to me had no head,” said the boy who was wounded by shrapnel in the leg.

Major General Dan Harel, the army commander in Gaza, said the shell was aimed at militants who had fired an anti-tank shell at an armored personnel carrier, lightly injuring three soldiers. Harel said several Palestinian children were apparently near the gunmen. “We are very sorry that civilians are being hurt ,” Harel said, but accused gunmen of using civilians as a shield.