At least 60 Palestinians are said to have been killed after Israel intensified its bombardment of Gaza and warned of a long conflict ahead.
Gaza's only power plant caught fire as Israel carried out 60 air strikes, targeting sites associated with Hamas, the Islamist group which controls Gaza.
UN staff members are said to be among those killed.
An Israeli military spokesman said the strikes signalled a "gradual increase in the pressure" on Hamas.
In a televised address on Monday, Prime Minister Benjamin Netanyahu stressed the need to destroy tunnels dug under the Gaza-Israel border, to prevent militants infiltrating Israel.
Palestinian officials say 1,115 Palestinians, most of them civilians, have been killed in the fighting since 8 July while Israel has lost 53 soldiers and three civilians - two Israelis and a Thai worker.
UN Relief and Works Agency spokesman Chris Gunness said in a tweet that a number of staff members had reportedly been killed. The UN is currently caring for 182,604 Palestinians in its 82 shelters in Gaza, he said.
In another development, Iran's Supreme Leader, Ayatollah Ali Khamenei, accused Israel of acting like a "rabid dog" and called on Muslims to arm Palestinians to enable them to fight back against "genocide".
A huge plume of smoke rose over the strip's only power plant after one of its fuel tanks was reportedly set alight by Israeli tank shells, and the plant was forced to shut down.
For the past three weeks, most Gazans have been living with just a few hours of electrical supplies and now the situation will almost certainly get worse, the BBC's Martin Patience reports from Gaza.
Gaza also receives some power supplies from Israel and Egypt.
Fifty-five houses were destroyed in the bombing, with people buried under rubble in at least three of them, Palestinian security sources told the BBC.
The unoccupied house of former Hamas Prime Minister Ismail Haniyeh was destroyed.
"The destruction of stones will not break our will and we will continue our resistance until we gain freedom." he was quoted as saying on a Hamas website afterwards.
A neighbour, Um Hani Abu Ryalah, told AP news agency the experience had terrified her family: "Our children were so scared and they were screaming. Now they can't hear because of the loud explosions and they are shaking."
Israeli fire is also said to have damaged the Hamas TV and radio stations, three mosques, four factories and government buildings which included the finance ministry and a compound belonging to the interior ministry.
Gaza's port was also destroyed, Palestinian security sources told the BBC, and two schools and a kindergarten were on fire after being hit.
Among the 60 people killed overnight were seven families, the Palestinian health ministry said.
Rockets fired from Gaza continued to hit Israel on Tuesday.
Lt-Col Peter Lerner, an Israeli military spokesman, told AP pressure was being increased on Hamas.
"Israel is determined to strike this organisation and relieve us of this threat," he said.
On Monday, five Israeli soldiers were killed when militants infiltrated the border, while a mortar bomb killed four earlier and a tenth died in a clash in southern Gaza, the Israel Defense Forces (IDF) said.
In his address on Monday night, Mr Netanyahu said Gaza had to be demilitarised in order to protect Israel.
"We will not finish the operation without neutralising the tunnels, which have the sole purpose of destroying our citizens, killing our children," he said.
Israel's Operation Protective Edge began on 8 July after a surge in militant rocket attacks.
A rally in support of the operation is planned for Tuesday evening in Tel Aviv.