Gaza City, Gaza - The Israeli air force continued to pound the Gaza Strip on Wednesday in retaliation for the weekend's attacks by Hamas as the death toll soared on both sides.

Israel is enforcing a blockade of energy supplies for around 2 million Palestinians in Gaza.

The sole power plant there has ceased its normal production, the operator said, with electricity now generated from solar power, but it would only be enough for about 10 hours of electricity per day. Hospitals in the enclave, already overwhelmed, are on the brink of collapse.

Meanwhile, preparations for a full-scale ground invasion of Gaza continue as Israeli troops mass along the border with the besieged strip.

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The heavily divided Israeli government led by Prime Minister Benjamin Netanyahu of the Likud party, has reached an agreement with leading opposition politician Benny Gantz to form an emergency government.

An Israeli woman and her two children who were held hostage by Palestinian militant group Hamas in the Gaza Strip have supposedly been freed, a statement issued by the Islamists' armed wing said.

"An Israeli settler and her two children were released after they were detained during the clashes," Ezzedine al-Qassem Brigades, the armed wing of Hamas, said in a statement with accompanying footage of the alleged release.

The United States is "clearly concerned" by rocket attacks by Lebanon's Hezbollah on northern Israel as tensions soar following the surprise assault by Palestinian militant group Hamas, the White House said Wednesday.

"We've been watching with concern some of the rocket attacks that come across the northern border of Israel from Lebanon, which obviously were coming from Hezbollah," National Security Council spokesman John Kirby said.

The US is "actively working" with Israel and Egypt on giving civilians safe passage from Gaza amid the war sparked by a bloody attack by Hamas, the White House said Wednesday.

"We're actively discussing this with our Israeli and our Egyptian counterparts. We support safe passage for civilians," National Security Council spokesman John Kirby told a briefing.

At least 22 US citizens have been killed since Hamas militants launched a massive attack against Israel, the US State Department said Wednesday, with Washington pledging firm support for its close ally.

"At this time, we can confirm the deaths of at least 22 US citizens. We extend our deepest condolences to the victims and to the families of all those affected," a State Department spokesperson said.

In total, the number killed in retaliatory Israeli airstrikes in the Gaza Strip since Saturday rose to at least 1,100 on Wednesday, among them 326 children. Around 5,339 other people have been injured, the Health Ministry in Gaza said.

The number of people killed in Israel during large-scale attacks by Hamas which began on Saturday has now risen to at least 1,200, IDF spokesman Jonathan Conricus said, the "overwhelming majority" of whom were civilians.

The Israelis also said they had bombed the Islamic University of Gaza because it was being used by Hamas as a training site for military intelligence personnel and for the development and production of weapons.

Israeli jets bombed the headquarters of the Palestinian Red Crescent too, the rescue service said, while the United Nations refugee agency for Palestinians, UNRWA, said it has lost nine of its employees since the start of the airstrikes on Gaza.

The Israeli raids have displaced about 264,000 Palestinians in total in the Gaza Strip, another UN humanitarian relief agency said.