The army feared that Palestinian militants would try to use the hundreds of demonstrators advancing into the sector where the special unit was deployed to surround it, Brigadier General Shmuel Zakai told a press conference.

"The danger stemmed from the fact that armed militants were part of the cortege," said Zakai, commander of Israeli forces operating in the Gaza Strip.

"If they crossed a certain line, we would have been faced with a situation in which some of our forces operating secretly would have been cut off."

On Wednesday, 10 Palestinians, mainly children, were killed and 50 others injured when Israeli troops with tanks backed by a helicopter fired on a protest against their deadly "Operation Rainbow" in Rafah.

The incident sparked a barrage of international indignation and the passage of a UN Security Council resolution criticizing Israel. The United States abstained from the UN vote, rather than using its veto power.

Zakai also said that 50 armed Palestinian militants had been arrested in Rafah since the start of the operation, aimed at rounding up wanted suspects and ending the weapons trade across the border with Egypt.

The general said only five houses used to shelter snipers had thus far been destroyed in the ongoing operation. Residents and witnesses say dozens of homes have been demolished.

On Wednesday, the Israeli army said one missile was fired in an open area as a warning to the Rafah protesters to stop their march.

Four tank shells and automatic weapons fire then ensued as the initial missile fired "did not deter the crowd", according to an army statement.

"We regret the loss of innocent life and are offering to treat those who are injured in our hospitals," army spokeswoman General Ruth Yaron said at the time.

WAR.WIRE