Another is said to have been seriously injured in the incident, which happened near the Jabaliya refugee camp.

Witnesses say the blast was caused by an Israeli air attack, but the Israeli military has denied any involvement.

The incident comes a day after aid agencies warned of a humanitarian catastrophe in Gaza if a five-month-old ceasefire was allowed to collapse.

The Popular Resistance Committees (PRC) militant grouping said that an Israeli air strike had targeted a group of its fighters as they approached the Israel-Gaza border near the northern town of Beit Hanoun.

However, a spokesman for the

Israeli army denied that it had carried out an air strike.

Analysts say the conflicting reports highlight growing tensions between Israel and the Palestinians as the five-month-old Gaza truce continues to unravel.

Rockets fired

At least 12 Gaza militants have been killed in skirmishes along the border in the past week.

About 140 rockets, missiles and mortars have been fired from Gaza across the border, prompting a week-long tightening of Israel's blockade of the territory.

On Friday, the UK-based aid agency, Oxfam, warned of catastrophe in Gaza and neighbouring areas of Israel if the

truce was not maintained.

It called on world leaders to do everything they could to break Israel's blockade of Gaza and urged Israel to resume supplies without delay.

Oxfam said both sides would suffer if fighting continued.

"If Israelis and Palestinians alike don't exert every effort now to maintain the truce which has held since last June, the result could be catastrophic for civilians both in Gaza and in nearby Israeli towns," the agency's executive director, Jeremy Hobbs, said in a statement.

Gaza's only power plant has also been forced shut down because it has run out of fuel, leading to widespread power cuts.