(Updated) Airstrike kills 27 in central Gaza and fighting rages as Israel's leaders are increasingly divided

An Israeli airstrike killed 27 people in central Gaza, mostly women and children, and fighting with Hamas raged across the north on Sunday as Israel's leaders aired divisions over who should govern Gaza after the war, now in its eighth month.

Prime Minister Benjamin Netanyahu faces criticism from the two other members of his War Cabinet, with his main political rival, Benny Gantz, threatening to leave the government if a plan is not created by June 8 that includes an international administration for postwar Gaza.

U.S. national security adviser Jake Sullivan was expected to meet with Netanyahu and other Israeli leaders on Sunday to discuss an ambitious U.S. plan for Saudi Arabia to recognize Israel and help the Palestinian Authority to govern Gaza in exchange for a path to eventual statehood.

Netanyahu opposes Palestinian statehood and has rejected those proposals, saying Israel will maintain open-ended security control over Gaza and partner with local Palestinians unaffiliated with Hamas or the Western-backed Palestinian Authority.

Gantz’s ultimatum expressed support for normalizing ties with Saudi Arabia and other Arab countries, but he also said “we will not allow any outside power, friendly or hostile, to impose a Palestinian state on us.”

Gantz's withdrawal would not bring down Netanyahu's coalition government but would leave him more reliant on far-right allies who support the “voluntary emigration” of Palestinians from Gaza, full military occupation and the rebuilding of Jewish settlements there.

Even as discussions about the future take on new weight, the war rages. In recent weeks, Hamas militants have regrouped in parts of northern Gaza that were heavily bombed in the war's early days and where Israeli ground troops operated.

The airstrike in Nuseirat, a built-up Palestinian refugee camp in central Gaza dating back to the 1948 Arab-Israeli war, killed 27 people, including 10 women and seven children, according to records at Al-Aqsa Martyrs Hospital in nearby Deir al-Balah, which received the bodies.

A separate strike on a Nuseirat street killed five people, according to the Palestinian Red Crescent emergency service. In Deir al-Balah, a strike killed Zahed al-Houli, a senior officer in the Hamas-run police, and another man, according to the hospital.

Palestinians reported more airstrikes and heavy fighting in northern Gaza, which has been largely isolated by Israeli troops for months and where the World Food Program says a famine is underway.

The Civil Defense said the strikes hit several homes near Kamal Adwan Hospital in Beit Lahiya, killing at least 10 people. Footage released by rescuers showed them trying to pull the body of a woman out of the rubble as explosions echo in the background.

In the urban Jabaliya refugee camp nearby, residents reported a heavy wave of artillery and airstrikes.

“The situation is very difficult,” said Abdel-Kareem Radwan, 48. He said the whole eastern side has become a battle zone where the Israeli fighter jets “strike anything that moves."

Mahmoud Bassal, a spokesman for the Civil Defense, said rescuers had recovered at least 150 bodies, more than half of them women and children, since Israel launched the operation in Jabaliya last week. He said around 300 homes have been completely destroyed.

Israel launched its offensive after Hamas’ Oct. 7 attack, in which militants stormed into southern Israel, killing around 1,200 people, mostly civilians, and abducting some 250.

The war has killed at least 35,000 Palestinians, according to Gaza's Health Ministry, which doesn't distinguish between combatants and civilians. Around 80% of the population of 2.3 million Palestinians have been displaced within the territory, often multiple times.

“We need a decent life to live," said Reem Al-Bayed, who left Gaza City and is sheltering with thousands in the gritty coastal Muwasi camp in the south without basic facilities like wells. "All countries live a decent life except us.”

She gave herself a quick mouthful of bread before tearing the rest into pieces for half a dozen children, then poured them a can of beans.

Israel says it tries to avoid harming civilians and blames the high death toll on Hamas, which it says operates in dense residential areas.

Netanyahu's critics, including thousands of protesters who took to the streets again on Saturday, accuse him of prolonging the war and rejecting a cease-fire deal that would release hostages so he can avoid a reckoning over security failures that led to the attack.

Polls show that Gantz, a political centrist, would likely succeed Netanyahu if early elections are held. That would expose Netanyahu to prosecution on longstanding corruption allegations.

Netanyahu denies any political motives and says the offensive must continue until Hamas is dismantled and the estimated 100 hostages held in Gaza, and the remains of more than 30 others are returned. He has said it's pointless to discuss postwar arrangements while Hamas is still fighting because the militants have threatened anyone who cooperates with Israel.

Netanyahu also faces pressure from Israel's closest ally, the United States, which has provided crucial military aid and diplomatic cover for the offensive while expressing growing frustration with Israel's conduct of the war and the humanitarian crisis.

President Joe Biden's administration recently held up a shipment of 3,500 bombs and said the U.S. would not provide offensive weapons for a full-scale invasion of the southern Gaza city of Rafah, citing fears of a humanitarian catastrophe.

But last week, after Israel launched what it called a limited operation in Rafah, the Biden administration told legislators it would move forward with the sale of $1 billion worth of arms, according to congressional aides.

Magdy reported from Cairo and Krauss from Jerusalem.