Albanese added that “we cannot have disregard for innocent life, and I’m very concerned at the consequences for those civilians and also the serious that harm that would be caused to Israel’s own interests in terms of its standing in the international community”.

While his government has joined other nations in pausing funding to the United Nations Relief and Works Agency (UNRWA) as it investigates claims its employees were involved in the October 7 attacks, Albanese flagged that he wanted to resume supporting the major humanitarian aid provider as soon as possible.

“We can’t have babies and children starving in Gaza,” he said. “We need to have a humanitarian approach there.”

New Zealand Prime Minister Christopher Luxon used similar language while expressing concern about Israel’s military operation in Rafah, saying: “Palestinian civilians cannot pay the price of Israel trying to defeat Hamas.”

Israeli planes, tanks and ships took part in the initial pre-dawn strikes on Rafah on Monday, with two mosques and several houses hit, according to residents.

In a statement, Hamas said the strikes on the city were a continuation of the “genocidal war” and the forced displacement attempts Israel has waged against the Palestinian people.

The Israeli military said it struck “terror targets in the area of Shaboura”, a district in Rafah. The military statement said the series of strikes had concluded, without elaborating on the targets or assessing the potential damage or casualties.

Israel announced it had rescued two hostages during a raid by special forces in a Rafah neighbourhood.

The freed hostages – identified as Fernando Simon Marman, 60, and Louis Har, 70 – were taken to Sheba hospital in central Israel, a statement from the hospital said, and were confirmed by doctors to be in “good condition”.

They were rescued from a residential building in the raid that also killed at least seven people, according to Palestinian officials. Witnesses reported at least 17 airstrikes, flares and Apache helicopter fire.

The men were kidnapped by Hamas militants from Kibbutz Nir Yizhak in the October 7 cross-border attack. They are just the second and third hostages to be rescued safely.

Israeli military spokesman Richard Hecht said the operation was based on “precise intelligence” and that the site, located on the second floor of a building, had been watched for “some time”. He said Netanyahu joined Israel’s military chief and other top officials as the raid unfolded.

The White House said Biden had warned Netanyahu in a call on Monday (AEDT) that Israel should not conduct a military operation against Hamas in Rafah without a “credible and executable” plan to protect civilians.

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A strong supporter of Israel throughout his career, Biden said last week that Israel’s military response in Gaza was “over the top”, and that he had sought “urgent and specific” steps to strengthen humanitarian aid.

Foreign Minister Penny Wong said: “Many civilians who were displaced in Israeli operations in the north have moved south to this area, often under Israeli direction.

“Israel now must exercise special care in relation to these civilians. Not doing so would have devastating consequences for those civilians and cause serious harm to Israel’s own interests.”

European Union foreign policy chief Josep Borrell said that “an Israeli offensive on Rafah would lead to an unspeakable humanitarian catastrophe and grave tensions with Egypt”, a problem given Egypt has been helping to negotiate a ceasefire and hostage release deal between Israel and Hamas.

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Hamas’ Al-Aqsa television station earlier quoted an unnamed Hamas official as saying any invasion of Rafah would “blow up” talks for an extended ceasefire agreement.

Netanyahu told Fox News Sunday that there was “plenty of room north of Rafah for them to go to” after Israel’s offensive elsewhere in Gaza, and said Israel would direct evacuees with “flyers, with cellphones and with safe corridors and other things”. But the offensive has caused widespread destruction, with little capacity to take in people.

The stand-off between Israel and Egypt, two close US allies, took shape as aid groups warned that an offensive in Rafah would worsen the catastrophic humanitarian situation in Gaza. Around 80 per cent of residents have fled their homes, and the UN says a quarter of the population faces starvation.

A ground operation in Rafah could cut off one of the few avenues for delivering food and medical supplies. Forty-four trucks of aid entered Gaza on Sunday, said Wael Abu Omar, a spokesman for the Palestinian Crossings Authority. About 500 entered daily before the war.

Where will civilians go?

Qatar, Saudi Arabia and other countries have also warned of severe repercussions if Israel goes into Rafah.

“An Israeli offensive on Rafah would lead to an unspeakable humanitarian catastrophe and grave tensions with Egypt,” European Union foreign policy chief Josep Borrell wrote on X. Human Rights Watch said forced displacement is a war crime.

Egyptian officials fear that if the border is breached, the military would be unable to stop a tide of people fleeing into the Sinai Peninsula.

The UN says Rafah, normally home to fewer than 300,000 people, now hosts 1.4 million more and is “severely overcrowded”.

In Rafah, some displaced people packed up again. Rafat and Fedaa Abu Haloub, who fled Beit Lahia in the north earlier in the war, placed their belongings onto a truck. “We don’t know where we can safely take him,” Fedaa said of their baby. “Every month we have to move.”

Om Mohammad al-Ghemry, displaced from Nuseirat, said she hoped Egypt would not allow Israel to force Palestinians to flee into the Sinai “because we do not want to leave”.

with Reuters, AP, AAP