In a tragic mishap that will fuel criticisms of Israel for firing indiscriminately in Gaza, three hostages have been killed by troops who mistook the trio for hostages.

The deaths came during an operation against a Hamas battalion in Gaza City, Israeli military spokesman Daniel Hagari says.

Shortly after the incident in the Shejaiya district the suspicion arose that the dead could be hostages, Hagari said.

The bodies were then taken to Israeli territory for closer examination.

It was confirmed that they were three Israeli hostages.

“This is a tragic incident, the army bears full responsibility,” Hagari said.

The army immediately began an investigation of the incident.

Hagari emphasised that Shejaiya was an “active combat zone” where fighting was ongoing in recent days and expressed his condolences to the hostages’ families.

—AAP