Khaled Mashaal, the exiled Hamas leader, has marked the paramilitary group's 25th anniversary in Gaza by calling for armed struggle and jihad against opponents.

On his first visit to Gaza, the Hamas chief said his organisation will "never recognise the legitimacy of the Israeli occupation".

"Jihad and the armed resistance is the only true path to liberation. We don't kill Jews because they are Jews. We kill the Zionists because they are conquerors and we will continue to kill anyone who takes our land and our holy places," he said.

Addressing a huge crowd waving green flags, Mashaal pledged to "free the land of Palestine inch by inch". The rally was attended by other Hamas leaders, including Hamas Prime Minister Ismail Haniyeh.

Many supporters at the anniversary rally dressed their children in military uniform and gave them toy guns and rockets to carry.

The Islamic militant group, which has been declared a terrorist organisation by the US and the EU, said that nearly 500,000 people attended the rally, although the claim cannot be independently verified. Support for Hamas in the Arab world has grown steadily over recent years.

The rally took place at Gaza City's al-Katiba Square where a huge replica of a M75 missile had been erected in a show of muscle-flexing by Hamas. Even while the leaders were addressing the rally, the crowd called for rockets to be fired at Israel.

"Liberating Palestine, all of Palestine, is the duty and right and goal of all Arabs and Muslims," said Mashaal.

Mashaal's remarks appeared to contradict his comments during a recent CNN interview, in which he suggested that the militant group accepted a Palestinian state within the pre-1967 border.

The 56-year-old also took the opportunity to mend fences with Hamas' political rival Fatah, calling upon the entire Arab world to stand together in fighting against adversaries.

In response to the Hamas celebrations, Israeli Prime Minister Benjamin Netanyahu's spokesman Ofir Gendelman wrote on Twitter: "Hamas celebrates 25 years of murdering Israelis by rockets and suicide bombings as well as executing Fatah members and violating ... human rights."