At least 12 people have been killed after Israel targeted a United Nations shelter for internally displaced Palestinians in southern Gaza's Khan Younis.

Some 75 others were also injured when the building in the city of Khan Younis was hit by two tank shells the previous day, Gaza director of U.N. agency for Palestinian refugees (UNRWA) Thomas White said on Thursday.

A fire then broke out in the center, where thousands of internally displaced people had sought shelter. The facility had been used as a U.N. vocational training center for young Palestinians.

The head of UNRWA, Philippe Lazzarini, condemned the attack and said the number dead was likely to rise.

"Once again a blatant disregard of basic rules of war," Lazzarini said on X.

He added that the compound had been clearly marked as a U.N. facility and its coordinates shared with Israeli authorities, without specifying responsibility for the shelling.

When asked about the incident, the Israeli army told AFP it had "ruled out that this incident is a result of an aerial or artillery strike by the IDF (army)."

"A thorough review of the operations of the forces in the vicinity is underway," the army said.

Teams from UNRWA and the World Health Organization (WHO) were trying to reach the shelter, which has been blocked for two days, White said.

U.N. officials gave different figures of the number of people sheltering at the facility, with Lazzarini saying 30,000 displaced people had been there.

Footage aired on Al Jazeera Arabic showed fire raging and thick plumes of smoke rising out of the building.

The United States said it "deplored" Wednesday's attack.

"We deplore today's attack on the UN's Khan Younis training center," State Department spokesperson Vedant Patel said.

"You've heard me say it before, you've heard the Secretary say it before, but civilians must be protected and the protected nature of U.N. facilities must be respected," Patel told reporters.

Pressed on whether the United States was in contact with Israel about the attack, Patel declined to go into the details of the conversations, but said: "We intend to continue to have these conversations with the Israeli government and raise these very tough and difficult situations."

"Humanitarian workers must be protected so that they can continue providing civilians with the lifesaving humanitarian assistance that they need," said Patel.

Khan Younis pummeled

Despite the outcry, Israel on Thursday stepped up its assault in the Gazan city of Khan Younis, with the Palestinian resistance group Hamas saying dozens were killed in heavy bombardment and urban combat.

The Israeli army says it has "encircled" Khan Younis, the hometown of Hamas's Gaza chief Yahya Sinwar, accused of being the mastermind of the Oct. 7 incursion that sparked the conflict.

Hamas, which has ruled Gaza since 2007, reported fierce clashes in the center and west of the city, where fighting has been inching closer to hospitals sheltering thousands of displaced people.

Its Health Ministry said at least 50 people were killed in Khan Younis over the past 24 hours. The army said several resistance members were killed in "close-quarters combat" in the city, and that strikes also targeted resistance groups in central and northern Gaza.

At Deir al-Balah in central Gaza, the scene of some of the heaviest fighting, AFPTV footage showed graves with the names of those buried scrawled on them in crayon amid debris-strewn streets and pockmarked buildings.

"Those look like graves, but they are not proper ones," said Ahmad Abdul Salam, a resident of the city's Al-Maghazi refugee camp. "We buried whole families, who were wiped out, inside these mass graves."

The war erupted when Hamas and other resistance groups from Gaza launched the unprecedented Oct. 7 incursion of Israel which claimed about 1,140 lives.

They also seized 250 hostages, and Israel says around 132 remain in Gaza. That number includes the bodies of at least 28 dead hostages, according to an AFP tally based on Israeli figures.

Israel in response launched a relentless military offensive that has killed at least 25,700 people, about 70% of them women and children.