The United Nations says the number of displaced people in Gaza has risen to more than 123,000 as a result of the fighting between Israel’s military and Hamas.

By late Sunday, retaliatory Israeli airstrikes in response to Hamas attacks had destroyed 159 housing units across Gaza and severely damaged 1,210 others, according to the United Nations Office for the Coordination of Humanitarian Affairs.

The UN agency for Palestinian refugees said a school sheltering more than 225 people took a direct hit.

Several Israeli media outlets, citing rescue service officials, said at least 700 people have been killed in Israel, including 44 soldiers.

The Gaza Health Ministry said 413 people, including 78 children and 41 women, were killed in the territory. An Israeli official said security forces have killed 400 militants and captured dozens more.

Around 2,000 people have been wounded on each side.

An estimated 1,000 Hamas fighters took part in Saturday’s initial attacks from Gaza, according to the Israeli military

The number of Hamas fighters involved in the initial incursion underscored the extent of planning by the militant group ruling Gaza, which has said it launched the attack in response to mounting Palestinian suffering under Israel’s occupation and blockade of Gaza.

Israel – which declared war on Hamas on Sunday – hit more than 800 targets in Gaza in response, their military said, including airstrikes that levelled much of the town of Beit Hanoun in the enclave’s northeast corner.

Israeli Rear Admiral Daniel Hagari told reporters Hamas was using Beit Hanoun as a staging ground for attacks.

There was no immediate word on casualties for the airstrike and most of the community’s population of tens of thousands had likely fled beforehand.

“We will continue to attack in this way, with this force, continuously, on all gathering (places) and routes” used by Hamas, Rear Admiral Hagari said.

Meanwhile, Hamas and the smaller Islamic Jihad group claimed to have taken captive more than 130 people from inside Israel and brought them into Gaza, saying they would be traded for the release of thousands of Palestinians imprisoned by Israel.

The Israeli military said only that the number of captives is “significant.”

Israel has carried out major military campaigns over the past four decades in Lebanon and Gaza that it portrayed as wars, but without a formal declaration.

The Security Cabinet also approved “significant military steps.”

The steps were not defined, but the declaration appears to give the military and Prime Minister Benjamin Netanyahu a wide mandate.

In a statement, Mr Netanyahu’s office said the aim will be the destruction of Hamas’ “military and governing capabilities” to an extent that prevents it from threatening Israelis “for many years.”

The Israeli rescue service Zaka said its paramedics removed about 260 bodies from a music festival attended by thousands that came under attack.

The total figure is expected to be higher as other paramedic teams were working in the area.