Bombs struck the Jabalia camp for a second time in two days, pulverising buildings and, according to the Hamas-run health ministry, killing dozens of people.
AFP witnessed extensive damage at the scene, with people frantically clawing through rubble to extract bloodied casualties.
Israel said its fighter jets had carried out the strike, targeting "a Hamas command and control complex" and "eliminating" an undefined number of militants.
Rescuers said "whole families" had died, but casualty details could not be immediately confirmed.
Israel has hit 11,000-plus targets in Gaza since October 7 -- when Hamas gunmen stormed into Israel and killed 1,400 people, including many civilians who were shot in cold blood.
Many nations backed Israel's right to strike back at Hamas, but as the civilian toll has mounted, so too has criticism of Israeli tactics.
According to Gaza's health ministry, 8,796 Gazans have been killed so far, mostly women and children. Whole neighbourhoods in Gaza have been levelled.
Israeli forces had already struck the Jabalia camp on Tuesday, killing at least 47 people, according to an AFP count.
- 'War crimes' -
The United Nations decried Israel's most recent bombings, joining a chorus of international condemnation from as far afield as Bolivia, which severed diplomatic ties in protest.
The UN's top human rights body -- citing "the high number of civilian casualties" and scale of destruction -- said it had "serious concerns that these are disproportionate attacks that could amount to war crimes."
Jordan recalled its ambassador to Israel "to condemn the Israeli war that is killing innocent people in Gaza".
Israel has rejected such accusations, saying Hamas deliberately uses civilian areas to hide command posts and arsenals that are used to attack Israeli civilians.
The Israel Defense Forces said Tuesday's strike on Jabalia had killed Hamas battalion commander Ibrahim Biari and destroyed an underground tunnel complex.
Lieutenant Colonel Richard Hecht described Bihari as a "high-value target" who deployed Hamas commandos during the October 7 attacks and has since "overseen Hamas' battle efforts in northern Gaza."
"Our war is not with the people of Gaza," he said. "The Palestinian people deserve peace and safety. Instead they are exploited as shields."
Hamas said seven of the 240 hostages it is holding, including three foreign passport holders, died in Tuesday's bombing, a claim that was impossible to verify.
The group's leader Ismail Haniyeh accused Israel of committing "barbaric massacres against unarmed civilians", saying it was covering its own "defeats".
- 'Finally' -
Earlier on Wednesday, hundreds of foreign passport holders, and wounded and sick Palestinians, were allowed to escape the fighting into Egypt, the first such evacuations since the war began.
After weeks of waiting, of hoping, the gates at Rafah opened and whole families -- struggling under the weight of their few remaining worldly possessions -- rushed across the heavily fortified frontier.
Ambulances whisked the wounded to the safety of Egyptian field hospitals, including one young boy with heavy bandaging around his stomach
Egypt said in all 335 foreigners or dual nationals and 76 of the seriously wounded and sick had crossed.
"We have been heading to the crossing for 25 days," said Alaa al-Shubaki, a Jordanian citizen. "Finally, I found my name in the evacuees list".
The foreigners included 31 Austrians, 20 Australians five French nationals, four Italians, and some German and US citizens, their governments said.
Umm Saleh Hussein, a Jordanian, said water and electricity shortages were "the least" of the hardships in Gaza.
"There were bigger problems such as the bombardment. We were afraid. Many families were martyred," she told AFP.
For those left behind, the wait for safety goes on.
"There is no hope in the Gaza Strip. It is not safe any more here," said Amen al-Aqluk, who fled Gaza City under Israeli orders.
"When the border opens, everybody will leave and emigrate. We encounter death every day, 24 hours a day."
A Gaza official said about 50 trucks carrying medical and food aid entered Gaza on Wednesday, among the biggest daily flows so far.
But the situation in Gaza remains desperate, with food, fuel and medicine for the 2.4 million residents all running short, according to aid groups.
More than 20,000 wounded people are still trapped in the Gaza Strip, according to Doctors Without Borders (MSF).
"Those who wish to leave Gaza must be allowed to do so without further delay. They must also be allowed the right to return," MSF said in a statement calling for a greater number of people to be evacuated.
- 'No rest' -
With fears mounting of a regional war, US President Joe Biden called for "urgent mechanisms" to dial down tensions and said top diplomat Antony Blinken would embark on another Middle East tour from Friday.
Turkey and Iran called for a regional conference to prevent a conflagration, as Israel faces a daily barrage of aerial attacks from Hamas and other Iran-backed groups around the Middle East, including Yemen's Huthi rebels.
In the north, Israel has traded near-daily fire with Lebanon's Iran-backed Hezbollah.
And the families of hostages kidnapped by Hamas have endured an unbearable wait for news of relatives thought to be held in the labyrinth of tunnels deep below Gaza.
Ayelet Sella, whose seven cousins were kidnapped by Hamas, said she could find "no rest" until her loved ones are returned.
"We have no more tears, our eyes are dry, we are empty three weeks on," Sella told AFP at the Great Synagogue in Paris. "I only ask for one thing, that they come back."
bur-arb/ser
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