Israel's military has said one of its troops has been killed in fighting in southern Gaza after Benjamin Netanyahu ordered new air strikes in the strip.
The death was announced after witnesses - including an Associated Press reporter and health officials - reported explosions and tank fire in Gaza City and Deir al Balah.
Those came after Mr Netanyahu ordered"powerful" strikes on Tuesday evening, after Israel accused Hamas of attacking its forces in southern Gaza , straining the peace deal brokered by Donald Trump earlier this month.
Hamas denied involvement in the attack in the city of Rafah and said in a statement that it remained committed to the US-backed ceasefire.
Mr Netanyahu had also accused Hamas of violating the ceasefire by handing over remains that were of an Israeli hostage who was already recovered.
A statement from the prime minister's office said:"Following the security consultations, Prime Minister Netanyahu instructed the military echelon to carry out powerful strikes in the Gaza Strip immediately."
US Vice President JD Vance said the ceasefire, which began on 10 October, was holding, telling reporters:"That doesn't mean there aren't going to be little skirmishes here and there.
"We know that Hamas or somebody else within Gaza attacked an (Israeli military) soldier. We expect the Israelis are going to respond, but I think the president's peace is going to hold despite that."
Hamas on Tuesday said that it would postpone the planned handover of a body of a hostage it had recovered, claiming violations of the ceasefire by Israel.
In a sign of the fragility of the ceasefire, Israeli troops were shot at in Rafah, and returned fire, according to an Israeli military official.
An Israeli military official told Sky's Middle East correspondent Adam Parsons that Hamas have "shown their true face" by attacking troops in "an area under Israeli control".
"This is yet another blatant violation of the ceasefire," they said.
"This comes after Hamas has also shown their true face and the fact that are pretending to not know where the remaining hostages are."
Hamas said on the Telegram messaging app that any Israeli escalation of attacks in Gaza would hinder search and recovery operations, and delay the return of the bodies of Israeli soldiers.
There are thought to be 13 bodies of hostages still in Gaza.
Speaking to Sky News, Israeli government spokesman David Mencer said:"The first line of this agreement is that all of our hostages should have been returned on the first day of this agreement.
"They were supposed to give back all of our hostages, and there was supposed to be a ceasefire. There are still 13 of our murdered hostages (in Gaza).
"And secondly, Hamas are firing on our troops. That is not a ceasefire."
'This is not about ceasing fire'
Francesca Albanese, the United Nations special rapporteur on Palestine, claimed on Sky News there is an"ongoing genocide" in Gaza, an assertion Israel has always strongly denied.
Of the ceasefire, Ms Albanese said:"This is not about ceasing fire, it's about ceasing genocide. Israel has no right to be in the Gaza Strip, in the West Bank and in East Jerusalem.
"If Israel comes to your studio and tells you 'they have attacked a soldier in Gaza'. What was the Israeli soldier doing in Gaza in the first place?"
After the ceasefire took effect, all 20 living hostages were freed in exchange for almost 2,000 Palestinian prisoners, but the remains of the dead have been slow to be repatriated.
Hamas has said there are problems finding them due to a lack of equipment to sift through the rubble in Gaza, and the search had been stepped up over the past few days after the arrival of heavy machinery from Egypt.
Bulldozers were working in Khan Younis, and further north in Nuseirat, with Hamas fighters deployed around them.
