At least 40 people have been killed and 60 injured in an Israeli attack on a tent encampment for displaced Palestinians in southern Gaza, civil emergency authorities in the enclave have said.

At least 20 tents in the al-Mawasi area of Khan Younis were struck in the early morning attack on Tuesday, Gaza’s Civil Defence said.

Al-Mawasi has been overcrowded with Palestinians sleeping in tents since the Israeli army designated the coastal area a “safe zone” during its ground invasions of Khan Younis and nearby Rafah.

Rescuers searching for survivors said they found craters of up to 9 metres (30 ft) deep at the tent camp, Al Jazeera Arabic reported, citing local sources.

Witnesses described chaotic scenes in the area, with fires burning while Israeli reconnaissance planes circled overhead.

A spokesperson for Gaza’s Civil Defence said that the initial assessment of the scene suggested the attack was “one of the most heinous massacres in this frenzied war”.

The spokesperson said ambulance and civil defence crews were having difficulty retrieving the bodies of people killed in the attack.

Israeli authorities said they had struck “significant Hamas terrorists” who had been operating at a command and control centre embedded inside the humanitarian zone in Khan Younis.

“The terrorists advanced and carried out terror attacks against [Israeli army] troops and the state of Israel,” the Israel Foreign Ministry said in a statement posted on X.

“Prior to the strike, numerous steps were taken to mitigate the risk of harming civilians, including the use of precise munitions, aerial surveillance, and additional means.”

Hamas, the Palestinian group that governs Gaza, denied that its fighters were present in the targeted area and accused Israeli authorities of perpetuating lies to justify their “ugly crimes”.

“The resistance has denied several times that any of its members exist within civilian gatherings or using these places for military purposes,” Hamas in a statement.