Israel has agreed to hold its fire in Gaza for four hours after a night of heavy shelling left at least 43 people dead, including many at a UN school.
It said a four-hour ceasefire in certain areas of the coastal strip, approved for "humanitarian reasons", would last until 7pm local time (6pm GMT).
Hamas responded by saying the lull had "no value", with at least one rocket fired towards Israel from Gaza shortly after the truce came into force.
It comes after a school in Jebalya refugee camp, where aid workers at "breaking point" are helping some of the 200,000 people who have been displaced by the war, was hit around dawn.
Damage to the school in Jebalya that doubles up as a shelter for refugees At least 19 people, including a young child, were killed, many of them as they slept.
Adbel Karim al Masamha, who came to Jebalya with his family to seek refuge, said: "People were martyred before our eyes. They were dismembered."
Another of the refugees, Haleema Ghabin, added: "No place is safe, neither homes nor schools. We are defenceless."
Jebalya was the second UN-run school to be hit in the past week, with a complex in Beit Hanoun struck last Thursday, killing at least 15 people.
Jebalya is one of eight UN refugee camps in Gaza An Israeli defence spokesman said militants near the school fired mortars at soldiers before the attack.
Other schools have been used to store weapons, the United Nations Relief and Works Agency (UNRWA) said.
On the 23rd day of the conflict, Israeli TV said progress was being made to achieve a deal, with a Palestinian delegation expected to arrive in Egypt for discussions.
Earlier, thick, black smoke could be seen rising from blazing fuel tanks at Gaza's only power station, which was knocked out on the bloodiest day of the conflict so far.
Sky's Sherine Tadros saw the aftermath of a rocket attack in Gaza City At least 128 Palestinians were killed as Israel sought to destroy what it called Hamas "terror sites" with heavy fire from the air, land and sea.
A family of seven were killed when Israeli tanks fired shells in Khan Younis, as ground operations to destroy a sophisticated network of tunnels continued.
Meanwhile, the leader of Hamas' military wing, Mohammed Deif, issued a rare statement, saying there will be no end to the fighting until the blockade of Gaza is lifted.
According to UNRWA, about 10% of Palestinians - more than 200,000 people - have been displaced by fighting and are taking refuge in its 85 emergency shelters.
Hundreds of homes have been razed to the ground in Gaza The figure is triple that seen at the peak of the 2008/9 conflict, with the organisation warning all of its camps are now full.
Justine Greening, the international development secretary, described the situation as "dire", as the UK pledged an extra £3m to provide a month of emergency food for more than 300,000 people.
More than 1,200 Palestinians, most of them civilians, have been killed since the start of the offensive on July 8.
On the Israeli side, 53 soldiers and three civilians have died.
A poll by Tel Aviv University found 95% of Israel's Jewish majority feel the conflict is justified.
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