Hamas warned Sunday that no hostages would leave Gaza alive unless its demands for prisoner releases are met, while the World Health Organization said the territory's health system was collapsing after more than two months of war.

Hamas triggered the conflict with the deadliest-ever attack on Israel on October 7 in which it killed some 1,200 people, according to Israeli figures, and dragged around 240 hostages back to Gaza.

Israel has responded with a relentless military offensive that has reduced much of Gaza to rubble and killed at least 17,997 people, mostly women and children, according to the Hamas-run health ministry.

As aid groups warn the territory is on the brink of being overwhelmed by disease and starvation, the head of the United Nations decried a divided and "paralysed" Security Council for failing to agree on a ceasefire.

"Gaza's health system is on its knees and collapsing," said World Health Organization chief Tedros Adhanom Ghebreyesus, with only 14 of 36 hospitals functioning at any capacity.

WHO's executive board on Sunday adopted a resolution calling for immediate, unimpeded aid deliveries.

The UN estimates 1.9 million of Gaza's 2.4 million people have been displaced -- roughly half of them children -- many forced south and running out of safe places to go.

AFP visited the bombed-out ruins of Gaza City's Al-Shifa hospital and found at least 30,000 people taking refuge amid the rubble after Israeli forces raided the medical facility last month.

"Our life has become a living hell, there's no electricity, no water, no flour, no bread, no medicine for the children who are all sick," said Mohammed Daloul, 38, who fled there with his wife and three children.

- 'Surrender now' -

In a televised statement, a Hamas spokesman said Israel will not receive "their prisoners alive without an exchange and negotiation and meeting the demands of the resistance."

Senior Hamas official Bassem Neim said in late November the movement was "ready to release all soldiers in exchange for all our prisoners".

Israel says there are still 137 hostages in Gaza, while activists say around 7,000 Palestinians are in Israeli jails.

On Sunday, a source close to Hamas and Islamic Jihad told AFP both groups were engaged in "fierce clashes" with Israeli forces near Khan Yunis, where an AFP journalist also reported heavy strikes, as well as Jabalia and Gaza City's Shejaiya district in the north.

Prime Minister Benjamin Netanyahu called on Hamas to give up.

"It is the beginning of the end of Hamas. I say to the Hamas terrorists: It's over. Don't die for (Yahya) Sinwar. Surrender now," he said, referring to the Hamas chief in Gaza.

The army said Sunday it struck more than 250 targets in 24 hours, including "a Hamas military communications site", "underground tunnel shafts" in southern Gaza, and a Hamas military command centre in Shejaiya.

It says 98 soldiers have died and around 600 wounded in the Gaza campaign.

Some 7,000 "terrorists" have been killed, according to National Security Adviser Tzachi Hanegbi.

"Hamas should not exist, because they are not human beings, after what I saw they did," Menahem, a 22-year-old soldier wounded on October 7, told AFP during a military-organised tour that did not allow him to give his surname.

- 'UN credibility undermined' -

UN Secretary-General Antonio Guterres said the Security Council's "authority and credibility were severely undermined", after the United States blocked a ceasefire resolution on Friday.

"I can promise, I will not give up," Guterres told Qatar's Doha Forum.

Qatar, where Hamas's top leadership is based, said it was still working on a new truce like the week-long ceasefire it helped mediate last month that saw 80 Israeli hostages exchanged for 240 Palestinian prisoners and humanitarian aid.

But Israel's relentless bombardment was "narrowing the window" for success, said Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani.

US Secretary of State Antony Blinken on Sunday again rejected a ceasefire.

"With Hamas still alive, still intact and... with the stated intent of repeating October 7 again and again and again, that would simply perpetuate the problem," he told ABC News.

But Blinken also told CNN that Israeli forces should ensure "military operations are designed around civilian protection".

In Rafah in southern Gaza, one displaced woman said she had been stuck there for 18 days despite having an Egyptian passport.

"Whenever I want to go somewhere, we hear bombing and shelling and feel scared and go back," said Noura al-Sayed Hassan.

"I've been searching for bread for my daughter for over a week now."

- Expulsion? -

The head of the UN agency for Palestinian refugees (UNRWA) voiced alarm over what he feared would be a mass expulsion of Palestinians into Egypt.

In an opinion piece Saturday in the Los Angeles Times, Philippe Lazzarini said "the developments we are witnessing point to attempts to move Palestinians into Egypt".

An Israeli spokesman responded: "There is not, never was, and never will be an Israeli plan to move the residents of Gaza to Egypt."

The fighting in Gaza has sparked pro-Palestinian protests in many countries, including large gatherings in Morocco, Denmark and Turkey on Sunday.

But there were also demonstrations against anti-Semitism, including in Brussels where European Commission President Ursula von der Leyen helped light a huge Hanukkah menorah candelabrum.

There are fears of regional escalation with frequent cross-border exchanges between Israel and Lebanese militants, and attacks by pro-Iran groups against US and allied forces in Iraq and Syria.

Syrian state news agency SANA reported late Sunday that Israeli strikes hit targets near the capital Damascus, although the country's air defense systems was able to deter some "and losses were limited to materials".

The Syrian Observatory for Human Rights reported that Israeli bombings "targeted Lebanese Hezbollah sites" including areas near the Damascus International Airport, noting that the bombing "was in three rounds".

Meanwhile, Yemen's Iran-backed Huthi rebels threatened to attack any vessels heading to Israel unless more aid was allowed into Gaza.

France said Sunday one of its frigates in the Red Sea had shot down two drones launched from Yemen.