Palestinian resistance group Hamas has said it "holds the occupation [Israel] and President Biden fully responsible for [the] occupation army's raid of Al Shifa medical complex," while the hospital's burns department said Israeli tanks and bulldozers are inside the complex now.
Hamas said early on Wednesday that a US intelligence statement in which the US supported Israel's conclusion that the militants had operations at Al Shifa "was a green light" for the incursion.
"The White House and the Pentagon's adoption of the false [Israeli] narrative, claiming that the resistance is using Al Shifa medical complex for military purposes, was a green light for the occupation to commit more massacres against civilians," Hamas said.
In the occupied West Bank, Palestinian Authority Health Minister Mai Alkaila said Israel was "committing a new crime against humanity, medical staff and patients by besieging" Al Shifa.
"We hold the occupation forces fully responsible for the lives of the medical staff, patients and displaced people in Al Shifa," Alkaila said in a statement.
Hamas, health authorities and Al Shifa directors have denied that the group is concealing military infrastructure in or under the complex and have said they would welcome an international inspection.
The Israeli military said it was carrying out a raid against alleged Hamas fighters in besieged Gaza's biggest hospital.
Youssef Abul Reesh, an official from Gaza's Health Ministry who is inside the hospital, told the AFP news agency he could see tanks inside the complex and "dozens of soldiers and commandos inside the emergency and reception buildings."
Dr Munir al Bursh, director general of the Gaza Health Ministry, told Al Jazeera television that Israeli forces had raided the western side of the medical complex.
"There are big explosions and dust entered the areas where we are. We believe an explosion occurred inside the hospital," Bursh said.
Gaza authorities say some 650 patients and 5,000 to 7,000 other civilians are trapped inside the hospital grounds, under constant fire from Israeli snipers and drones.
Gaza's media office said 40 patients have died in the past five days amid an Israeli siege and fuel shortage.
"Eighty-two people were buried in a mass grave inside the medical complex because of the intransigence of the occupation, which is still completely besieging the hospital," it added.
Palestinians trapped in the hospital dug a mass grave to bury patients who died, and no plan was in place to evacuate babies despite Israel announcing an offer to send portable incubators, Ashraf al Qidra, Gaza's Health Ministry spokesman, said.
Qidra said there were about 100 bodies decomposing inside and no way to get them out.
Israel's storming of Al Shifa Hospital has raised questions about how it would interpret international laws on the protection of medical facilities and the thousands of displaced people sheltering there, UN human rights officials have said.
Omar Shakir, Israel and Palestine director for Human Rights Watch, said before Israel's raid that even if Hamas was proven to be using hospitals to conduct military operations, international law required that effective warnings be given before attacks.
This meant people there needed a safe place to go and a safe way to get there, Shakir said.
"It's very alarming because you have to remember hospitals in Gaza are housing tens of thousands of displaced persons."
At least 11,320 Palestinians have been killed since the start of the Israeli war on the blockaded enclave, including nearly 7,800 women and children, while more than 29,200 others have been wounded, according to the latest figures from Palestinian authorities.
Thousands of buildings, including hospitals, mosques and churches, have been damaged or destroyed in the Israeli strikes and land invasion.
The Israeli death toll, meanwhile, stands at 1,200, according to official figures.