Israeli tanks and troops began moving into southern Gaza early Wednesday in a new phase of Israel's two-week offensive, apparently heading in the direction of the city of Khan Younis, Palestinians and the military said.

The Israeli military said that forces are operating in central Gaza.

Israel launched its offensive on June 28, three days after Palestinian militants linked to the Hamas-led government captured an Israeli soldier in a cross-border raid. The operation was expanded last week to halt Palestinian militants from firing homemade rockets into Israel.

Abdel Asmeri, a Palestinian farmer, said he saw the forces advance after midnight about 700 meters (yards) into Gaza toward his village, which is near Khan Younis, a city of 100,000. Palestinian security officials said the Israeli forces were still near the border inside Gaza and had not approached populated areas. No casualties were reported.

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Palestinians said that Israeli bulldozers were leveling farmland in the area, and the military ordered Palestinian security to leave their forward positions.

The decision to widen the operation came as the European Union began delivering aid to Gaza in a bid to repair some of the damage caused by the Israeli invasion.

Prime Minister Ehud Olmert and his defense minister, Amir Peretz, decided to order new incursions into Gaza after Hamas' leader, Khaled Mashaal, said Monday he would not free the soldier, the security officials said. Mashaal demanded a prisoner swap — which Olmert has ruled out.

The invasion — Israel's largest ground operation in Gaza since withdrawing from the area last year — already has caused widespread destruction, knocked out much of Gaza's power supply and left more than 50 Palestinians dead, most of them gunmen. One Israeli soldier also has died.

Responding to concerns of a looming humanitarian crisis, the European Commission said Tuesday it has started delivering $765,000 in monthly aid to hospitals in the Gaza Strip. The money is the first to be delivered under an internationally backed plan that bypasses the Hamas-led government.

The European Union, along with Israel and the U.S., considers Hamas a terrorist group.

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EU spokeswoman Emma Udwin said the aid was requested by Palestinian President Mahmoud Abbas after Israel destroyed six electricity transformers at a power plant during its Gaza offensive. The Israeli offensive has left Gaza with sporadic electricity, almost all of it provided by Israel. The funds are to go to purchase fuel for emergency generators at Gaza hospitals, Udwin said.

In Gaza, Palestinian Prime Minister Ismail Haniyeh, a top Hamas leader, said the area is "on the verge of a genuine humanitarian crisis."

"There are shortages of food, fuel and essential needs of Palestinian citizens," he told his Cabinet, calling on the United Nations, Arab League, Muslim countries and the rest of the international community to help.

Late Tuesday, Abbas' office announced it had received $50 million from the Arab League — the largest sum of aid the Palestinians have gotten since Hamas' government took office in March. Officials said the money had bypassed Hamas because of the international boycott.

Mohammed Awad, the Palestinian Cabinet secretary, said Hamas had agreed to allow Abbas to handle the money. He said the funds had come from Arab governments and would be used to pay long-overdue salaries to civil servants, who haven't been paid in four months.

Israel has rejected Hamas' call for a prisoner exchange, and demanded the unconditional release of its soldier to end the offensive.

Abbas, a moderate and rival of Hamas, traveled to Jordan on Tuesday to discuss ways of ending the standoff.

"We exchanged views on a way out of this dilemma and we hope that God will help us and our Arab brothers to find a way out of this crisis," Abbas said after returning to the West Bank.

In Amman, King Abdullah II pledged to "work tirelessly, and in cooperation with all international sides, to ensure the cessation of (Israeli) military operations and ease the tragic situation faced by Palestinians," according to a statement by the king's office.

Hamas leader Mashaal, who lives in exile in Syria, on Monday called the Israeli soldier, Cpl. Gilad Shalit, a prisoner of war and demanded a prisoner swap. Shalit has not been seen since he was captured by Hamas-linked militants on June 25, though Israeli officials believe he is alive.

Shalit's father, Noam, on Tuesday called on Hamas to allow the Red Cross to visit his son. Under Geneva Conventions, the Red Cross is supposed to have access to POWs. "If this is so, I ask why is a visit to Gilad by the Red Cross not allowed," he told Channel 2 television.

Also Tuesday, a 15-month-old Palestinian boy injured in an Israeli missile strike last month died of his wounds at an Israeli hospital. The botched airstrike, which hit a Palestinian house on June 22, killed two Palestinians instantly and wounded 13.