The Israeli army has reportedly begun flooding a network of tunnels belonging to the Palestinian resistance group Hamas as the U.N. warned of the potential "collapse of the humanitarian system" in the territory after a funding row.

Meanwhile, the epicenter of attacks in recent weeks has been Khan Younis, southern Gaza's main city, where vast areas have been reduced to a muddy wasteland of bombed-out buildings, as people continued to leave town Wednesday.

"We left the Nasser hospital without any mattresses, under the tank and airstrikes. We didn't know where to go," said one young woman.

"We're out in the cold, left to fend for ourselves, with no tents and nothing to survive on."

Elsewhere in the city, Israeli troops gave journalists a tour of a tunnel they said had been used as a Hamas command center.

"Every war has its own characteristics, and I think that this war, its basic character is about that over- and underground maneuver," Dan Goldfus, commander of the 98th Paratroopers Division, told reporters outside of the shaft.

The Israeli military, which has dubbed the vast network of tunnels "the Gaza metro," said Tuesday that it had begun flooding the underground complexes with water in a bid to "neutralize the threat of Hamas' subterranean network."

UNRWA row

The war has displaced the vast majority of Gaza's population, according to the U.N., which warned the humanitarian crisis in the besieged territory would only get worse if major donors didn't restore funding to UNRWA, its main aid agency for Palestinians.

Israel has alleged that several agency staff members took part in the Oct. 7 Hamas incursion, leading key donor countries including the United States and Germany to suspend funding.

The U.N.'s coordinator for Gaza aid, Sigrid Kaag, said Tuesday that no other agency could "replace or substitute" UNRWA, which has thousands of employees.

The heads of several U.N. agencies, including the WHO, the U.N. rights office, UNICEF and the World Food Programme, later issued a statement warning that defunding UNRWA would "have catastrophic consequences for the people of Gaza."

Withholding the funds, they said, was "perilous and would result in the collapse of the humanitarian system in Gaza, with far-reaching humanitarian and human rights consequences."

Washington, which said it had given $131 million to UNRWA since October, said it "very much supported" the agency's work.

"We want to see that work continued, which is why it is so important that the United Nations take this matter seriously, that they investigate, that there is accountability for anyone who is found to have engaged in wrongdoing," said State Department spokesman Matthew Miller.

Truce proposal

After a recent meeting in Paris between U.S., Israeli, Egyptian and Qatari officials yielded a proposed framework for a truce, Hamas confirmed Tuesday it had received the proposal and was "in the process of examining it and delivering its response."

Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani, whose government helped broker a previous truce in November, voiced hope an initial deal might lead to a permanent cease-fire.

Sheikh Mohammed said the current plan included a phased truce that would see women and children hostages released first, with more aid also entering Gaza.

The United States also expressed hope for a deal, with Secretary of State Antony Blinken saying that "very important, productive work has been done."

Israeli Prime Minister Benjamin Netanyahu, whose office earlier called the talks "constructive," ruled out releasing "thousands" of Palestinian prisoners as part of any deal.

"I would like to make it clear ... We will not withdraw the IDF (army) from the Gaza Strip and we will not release thousands of terrorists. None of this will happen," he said Tuesday.