At least 15 people, including a baby, have been killed and many more wounded after the Israeli military targeted a UN-run school holding Palestinian refugees in Gaza, according to its health ministry.

"Such a massacre requires more than one hospital to deal with it," said Ayman Hamdan, director of the Beit Hanoun hospital.

The director said that various medical centres were receiving the wounded after the blast hit the school in Beit Hanun, holding approximately 1,500 Palestinian refugees.

A woman at the school at the time of the Israeli shelling, Laila al-Shinbari, said that families had gathered in the centre's courtyard expecting a Red Cross evacuation when the shells hit.

"All of us sat in one place when suddenly four shells landed on our heads ... Bodies were on the ground, [there was] blood and screams. My son is dead and all my relatives are wounded including my other kids," she said.

A UN official said that, immediately prior to the strike, people were asked to leave the shelter for fear that it may be targeted.

"We were talking to the shelter asking them to leave, as we feared it was a potential target," said the official.

An AFP correspondent reported seeing the body of a one-year-old child and his mother at a nearby morgue after the strike.

Spokesman for the United Nations Relief and Works Agency (UNRWA) Chris Gunness, who had earlier confirmed the strike, criticised Israel's actions as the location of the shelter had been given to the Israeli military beforehand.

"Precise co-ordinates of the UNRWA shelter in Beit Hanoun had been formally given to the Israeli army ... Over the course of the day UNRWA tried to coordinate with the Israeli Army a window for civilians to leave and it was never granted," Gunness tweeted.

Gunness estimates that 141,338 Palestinians have been displaced into 83 UNRWA shelters as Israel continues to issue evacuation warnings to many areas of Gaza.

Earlier, three UNRWA workers were killed by Israeli airstrikes in the Gaza Strip, the first members the development agency's workforce to perish in the conflict.

Before the latest strike, at least 710 Palestinians had been killed in Israel's Operation Protective Edge, according to the Gaza health ministry. Thirty-two Israeli troops and three civilians have also been killed in fighting in Gaza.