Israel imposed a total siege on the Gaza Strip Monday and cut off the water supply as it kept bombing targets in the crowded Palestinian enclave in response to the Hamas surprise assault it has likened to the 9/11 attacks.

Reeling from the Islamist group's unprecedented ground, air and sea attacks, Israel has counted more than 700 dead and launched a withering barrage of strikes on Gaza that have raised the death toll there to 560 people.

Israeli Prime Minister Benjamin Netanyahu threatened that "what Hamas will experience will be difficult and terrible … We are going to change the Middle East.

"This is only the beginning," he vowed. "We will defeat them with force, enormous force."

Plumes of smoke from deafening explosions blackened the skies of Gaza as Hamas kept launching rockets as far as Tel Aviv and Jerusalem, where missile defence systems fired and air raid sirens blared.

Hamas — whose militants surged into Israeli towns on Saturday, spraying gunfire at civilians and dragging off about 100 hostages — claimed on Monday that Israeli air strikes had killed four of the captives.

Israel said it had called up 300,000 army reservists for its "Swords of Iron" campaign, and truck convoys were moving tanks to the south, where its forces had dislodged the last Hamas fighters from embattled towns.

"We are in control of the communities," said military spokesman Daniel Hagari, cautioning that some "terrorists" may remain after about 1,000 militants had penetrated the region on the Jewish Sabbath.

Defence Minister Yoav Gallant said Israel would impose a "complete siege" on the long-blockaded enclave and stressed what this meant for its 2.3 million people: "No electricity, no food, no water, no gas — it's all closed."

Palestinians in the impoverished coastal territory braced for what many feared will be a massive Israeli ground attack aiming to defeat Hamas and liberate the hostages.

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