Israel has unleashed a fresh wave of blasts on Gaza, and called up an unprecedented 300,000 reservists and imposes a blockade, raising fears it plans a ground assault.

It came as Israeli Prime Minister Benjamin Netanyahu said in a live TV address to the nation that he had instructed the Israel Defence Forces to prepare for a mass offensive against Hamas at an intensity that hasn’t been seen before.

“The horrors that Hamas has committed have not been witnessed since the hours of ISIS,” Netanyahu said.

He also said the government would do everything for the Israeli hostages taken by Hamas into Gaza.

“Our hearts are with the families of the hostages.”

It followed footage emerging on Tuesday (Australian time) of at least four Israelis being executed soon after being taken hostage by Hamas – and the militant group threatened to kill one hostage for every Israeli attack on Gaza that lands without warning and to broadcast the executions for the world to see.

There were also unconfirmed reports on Tuesday of an Australian being among the scores of hostages seized by Hamas in Saturday’s attacks.

Defence Minister Richard Marles would not provide more detail but he confirmed there were not yet any Australian casualties.

“We will be pretty reticent about talking about any individual cases,” he told Seven’s Sunrise program on Tuesday.

About 10,000 Australians live in Israel and many more are tourists.

The Washington Post has reported it has seen graphic videos showing Israeli hostages being killed soon after being taken captive in a street in Be’eri, a kibbutz in southern Israel.

Also on Tuesday, the leaders of Britain, the US, France, Germany and Italy released a joint statement expressing “steadfast and united support” for Israel and their “unequivocal condemnation” of Hamas.

“We make clear that the terrorist actions of Hamas have no justification, no legitimacy, and must be universally condemned,” the leaders said.

“There is never any justification for terrorism.”

Australia’s Foreign Minister, Penny Wong, backed Israel’s right to retaliate after Saturday’s attacks.

“Israel has a right to defend itself, and this was an abhorrent attack,” Wong told ABC radio on Tuesday morning.

“The taking of hostages, the attacks on civilians, the sorts of images, awful images that we are seeing, reminds us of the security situation that Israel confronts.

“This is really a dreadful situation, a devastating loss of life.”

Israeli TV channels said the death toll from the Hamas attack had climbed to 900 Israelis, with at least 2600 injured, and dozens taken captive.

Among the Israeli dead were 260 mostly young people gunned down at a desert dance party. A day later dozens of survivors are still emerging from hiding. The site is littered with wrecked and abandoned cars.

Gaza’s Health Ministry said at least 687 Palestinians had been killed and 3726 wounded in Israeli air strikes on the blockaded enclave since Saturday. Apartment blocks and hospitals were among the sites attacked, according to media reports.

Fighting continued into the night on Monday. The Israeli military said it struck targets in the Gaza Strip from the sea and air, including a weapons depot it said belonged to Islamic Jihad and Hamas targets along Gaza’s coast line.

Witnesses said several Hamas security headquarters and ministries were hit, and the strikes destroyed some roads and houses. Israel also bombed the headquarters of the private Palestinian Telecommunication Co, which could affect landline telephone, internet and mobile phone services.

Hamas spokesman Abu Ubaida issued the threat on Monday to kill Israelis among the dozens held captive after the surprise attack on Saturday morning. He said Hamas would execute an Israeli captive for every Israeli bombing of a civilian house without warning.

There was no immediate response from the Israeli military to that threat. Israeli Foreign Minister Eli Cohen said more than 100 people had been taken captive by Hamas during the deadly cross-border incursion at the weekend.

Palestinians reported receiving calls and mobile phone audio messages from Israeli security officers telling them to leave areas mainly in the northern and eastern territories of Gaza, and warning that the army would operate there.

At the scene of the Hamas attack, Israel’s chief military spokesman said troops had re-established control of communities inside Israel that had been overrun, but isolated clashes continued as some gunmen remained active.

Israeli police officers stand guard after days of escalating violence. Photo: Getty

The impact was felt internationally, with governments from Italy, Thailand and Ukraine also reporting that their citizens had perished.

More than 10 Britons are feared dead or missing, the BBC reported on Monday, citing an official source.

In Washington, US President Joe Biden announced that at least 11 Americans had been killed and it was likely US citizens were among those held hostage.

“I have directed my team to work with their Israeli counterparts on every aspect of the hostage crisis, including sharing intelligence and deploying experts from across the United States government to consult with and advise Israeli counterparts on hostage recovery efforts,” Biden said.

Washington – which provides Israel with $US3.8 billion ($5.9 billion) in military assistance each year – said it was sending in fresh supplies of air defences, munitions and other security assistance to Israel, a senior US defence official said

The prospect that fighting could spread to other areas alarmed the region and world. Israeli troops “killed a number of armed suspects that infiltrated into Israeli territory from Lebanese territory”, the military said, adding helicopters “are currently striking in the area”.

Fears of a widening conflict meant more volatility for investors. Oil prices jumped more than 4 per cent, gold gained and the US dollar edged up against the euro. Major international air carriers have suspended or reined in flight services to or from Tel Aviv.

The shocking images of the bodies of hundreds of Israelis sprawled across the streets of towns, gunned down at an outdoor dance party and abducted from their homes were like nothing seen before in the decades-old Israeli-Palestinian conflict.

-with AAP