Israel's army rejected as "baseless" claims that its troops had buried hundreds of Palestinian bodies at a Gaza hospital, saying corpses had been examined in a search for hostages.

Gaza's Civil Defence agency said Tuesday that health workers had uncovered nearly 340 bodies, updating an earlier figure, of Palestinians allegedly killed and buried by Israeli forces at Nasser Medical Complex in the southern city of Khan Yunis.

"The claim that the IDF (army) buried Palestinian bodies is baseless and unfounded," the military said, without directly addressing allegations from the Hamas-run authorities that the Israeli troops were behind the killings.

It acknowledged that troops had examined corpses buried at the facility.

"During the IDF's operation in the area of Nasser Hospital, in accordance to the effort to locate hostages and missing persons, corpses buried by Palestinians in the area of Nasser Hospital were examined," the statement said.

"The examination was conducted in a careful manner and exclusively in places where intelligence indicated the possible presence of hostages.

"Bodies examined, which did not belong to Israeli hostages, were returned to their place," the statement said, without giving further details.

Ismail al-Thawabta, head of the Hamas government media office in the Palestinian territory, accused Israeli troops of digging mass graves at the hospital.

"We discovered mass graves inside Nasser Medical Complex" of people killed by "the occupation (Israeli) army", Thawabta told AFP on Monday.

The military did not offer any additional clarification in response to repeated AFP queries regarding allegations of troops digging "mass graves" at the hospital as claimed by Thawabta.

Intense fighting raged in mid-February in the area of Nasser hospital and Israeli tanks and armoured vehicles surrounded it on March 26.

The military said on Tuesday its forces "conducted a precise and targeted operation against the terrorist organization Hamas in the Nasser Hospital area" at the end of February.

"During the operation about 200 terrorists who were in the hospital were apprehended, medicines intended for Israeli hostages were found undelivered and unused, and a great deal of ammunition was confiscated."

Hospitals in Gaza have not been spared in the Israeli assault against Hamas.

The military accuses Hamas of using hospitals and medical facilities as command centres to stockpile weapons and equipment, and to hold hostages abducted in the October 7 attack.

Hamas denies the accusation.

Israel is engaged in a sweeping military assault against Hamas militants in Gaza after the group launched an unprecedented attack on southern Israeli communities on October 7.

The attack resulted in the deaths of 1,170 people, Israelis and foreigners, according to an AFP tally based on official Israeli figures.

Some 250 people were abducted to Gaza during the attack, of whom 129 remain captive, including 34 the Israeli military says are dead.

Israel's retaliatory offensive to eradicate Hamas has so far killed at least 34,183 people in the Gaza Strip, mostly women and children, according to the health ministry in the Hamas-run territory.