The Israeli military has withdrawn all of its ground troops from the southern Gaza Strip except for one brigade.
An Israeli brigade is typically made up of a few thousand troops.
Residents of the southern Gaza city of Khan Younis, which has come under Israeli bombardment in recent months, said they had seen Israeli forces leaving the centre of the city and retreating to the eastern districts.
The office of Israeli Defence Minister Yoav Gallant said in a statement that the "forces are exiting and preparing for their next missions, we saw examples of such missions in the Shifa operation, and also of their coming mission in the Rafah area".
Earlier, White House spokesperson John Kirby said it appeared the removal of troops appeared to be a "rest and refit" and not necessarily indicative of any new operations.
The plan to attack Rafah has drawn international concern, with more than 1 million Palestinians sheltering in the territory near the border with Egypt.
Israeli Prime Minister Benjamin Netanyahu said again on Sunday that there would be no ceasefire without the release of remaining hostages from Gaza.
The withdrawal comes as Egypt prepares to host a new round of talks aimed at reaching a ceasefire and hostage release deal.
It also comes amid mass protests in Israel calling for Israeli Prime Minister Benjamin Netanyahu's resignation.
The UK's foreign minister David Cameron also said on Sunday that Britain's support for Israel "is not unconditional", after the IDF admitted killing seven aid workers — including Australian Zomi Frankcom.
"We expect such a proud and successful democracy to abide by international humanitarian law, even when challenged," Mr Cameron wrote in The Sunday Times newspaper.
The US also issued its first ultimatum this week, insisting Israel must protect aid workers and reduce civilian deaths to secure US military support.
Israel's other recent withdrawal from fighting around Gaza's Al-Shifa hospital has shocked the World Health Organization.
Israel's offensive in Gaza, launched after the attack by Hamas on Israel six months ago on October 7, has focused in the past months on the south of the Palestinian enclave.
More than 250 hostages were seized and some 1,200 people killed during the October 7 attack, according to Israeli tallies, while more than 33,100 Palestinians have been killed in the Israeli offensive, according to the health ministry in Gaza.
Hezbollah hit in Lebanon
The Israeli military said on Sunday that it has completed another stage in preparing for possible war on its northern front with Lebanon and Syria.
"Over the past few days, another phase of the Northern Command's readiness for war was completed, centring on operational emergency storages for a broad mobilization of IDF troops when required," the military said in a statement titled: "Readiness for the Transition from Defense to Offense."
The statement came after Israel launched air strikes on eastern Lebanon and hit Hezbollah infrastructure sites early on Sunday after the armed group downed an Israeli drone, as both sides continue to trade fire amid escalating regional tensions.
The Israeli army said in a statement that fighter jets struck a military complex and three other sites belonging to Hezbollah in the eastern city of Baalbek.
It said the latest attack was in response to Iran-backed Hezbollah's downing of an unmanned aerial vehicle in Lebanese airspace, which the group identified as the Israeli-made Hermes 900 drone.
Hezbollah said it later fired dozens of Katyusha rockets that hit an air defence base in the occupied Golan Heights, in retaliation for the Israeli raids on eastern Lebanon.
The Israeli army was not immediately available for comment on that account.
Israel ready for Iran
The attacks in Lebanon came as Israel said it was prepared for any retaliation from Iran, following a strike that killed senior Iranian commanders in Syria earlier this week.
Defence Minister Yoav Gallant's office made the statement after he held an "operational situation assessment" with senior military officers.
Iran has threatened to respond to the suspected Israeli strike in Damascus that killed seven Iranian Revolutionary Guards Corps members.
A senior adviser to Iran's Supreme Leader, Yahya Rahim Safavi, said on Sunday that none of Israel's embassies were safe anymore, and that Tehran viewed confrontation with Israel as a "legitimate and legal right".
Israel has not confirmed it was behind the strike in Damascus, but its leaders have said in more general terms that they are operating against Iran, which backs Hamas in Gaza and Hezbollah in Lebanon.
The United States is also on high alert and preparing for a possible attack by Iran targeting Israeli or American assets in the region.
Reuters/ABC
