"Unwra decided to suspend all its operations in the Gaza Strip because of the increasing hostile actions against its premises and personnel," a UN spokesman was quoted by Reuters news agency as saying.

On Thursday, the UN relief agency Unwra said one person had been killed and two injured when a fork-lift truck on a UN aid mission came under Israeli tank fire at Gaza's Erez crossing.

The Israeli army says it is looking into the matter.

The aid agencies' concerns come amid fears the conflict with Gaza militants may spread, with rockets fired on Israel from Lebanon.

The incident followed Israel's heaviest bombardment so far on Gaza in nearly two weeks of conflict, with 60 air strikes targeting Hamas facilities.

Israeli forces observed a three-hour pause in fighting to allow humanitarian aid into Gaza.

The first of what was promised to be a daily ceasefire - on Wednesday - allowed aid agencies into the territory for the first time in days.

Efforts have continued to broker a full ceasefire - a senior Israeli official is in Cairo to hear details of a plan put forward by Egypt and France.

A Hamas delegation is expected in the Egyptian capital at some stage for parallel "technical" talks, Egyptian diplomats said.

'Access denied'

The International Committee of the Red Cross accused Israel of failing in its international obligations after its staff were met with "shocking" scenes.

Aid workers had been denied access to the site for days, it added.

"This is a shocking incident," Pierre Wettach, ICRC head for Israel and the Palestinian territories said in a statement.

"The Israeli military must have been aware of the situation but did not assist the wounded. Neither did they make it possible for us or the Palestinian Red Crescent to assist the wounded."

Correspondents say the criticism is unusually strong, coming from an agency considered to be neutral.

The Israeli army told Reuters news agency that any serious allegations would be properly investigated once a formal complaint was received.

Meanwhile, Amnesty International accused both sides of using civilians as human shields.

"Israeli soldiers have entered and taken up positions in a number of Palestinian homes, forcing families to stay in a ground floor room while they use the rest of their house as a military base and sniper position," it said in a statement.

While Palestinian families reported that in some cases Palestinian gunmen agreed to leave areas near civilian homes without firing at Israeli forces, the statement went on, "in other cases they have refused the residents' requests and only left after firing".

Nursing home

At least three Katyusha rockets were fired from southern Lebanon into the northern Israeli area of Nahariya early on Thursday.

One of the rockets hit a nursing home where some 25 elderly residents were eating breakfast in a nearby dining hall, the Jerusalem Post reports.

At least two people were slightly wounded and a number of others were suffering from shock, Israeli officials said.

Israel immediately responded with five artillery shells into Lebanon, calling it a "pinpoint response at the source of fire".

Lebanese Prime Minister Fouad Siniora was swift to condemn the attack, and called for the army and UN to investigate.

The rocket attacks from Lebanon have raised concerns about a wider war in the region, says the BBC's Middle East Editor Jeremy Bowen.

In Gaza, Israel continued its offensive overnight with 60 airstrikes targeting police sites, 10 Hamas tunnels, weapons storage facilities, launching pads "and a number of armed gunmen", the Israeli army said.

Naval and artillery units "continued to support the ground forces" with one soldier lightly wounded, the army added.

About 700 Palestinian and 11 Israeli lives are said to have been lost since the offensive began 12 days ago.

Casualty claims in Gaza have been difficult to independently verify.

While the BBC has had Palestinian producers reporting from Gaza, Israel only allowed Western TV crews to enter on Wednesday, embedded with its army.