The latest blow to Gaza's destroyed healthcare sector came as Israel prepared for an assault of the southernmost city Rafah, home now to more than a million mostly displaced Palestinians living in desperate conditions.
Israel's air and ground offensive has devastated much of Gaza and forced nearly all its inhabitants from their homes. Palestinian health authorities say 28,985 people, mostly civilians, have been killed.
Gaza's hospitals have been a focal point of the four-month-old war between Israel and Palestinian group Hamas.
The Nasser Hospital in the southern city of Khan Younis went out of action early on Sunday, Gaza health ministry spokesperson Ashraf al-Qidra said.
The Israeli military said in a statement that hundreds of Hamas were hiding in Nasser hospital and some had posed as medical staff. It released images of weapons it said were found along with medications that were transferred from Israel and intended for the more than 100 hostages abducted from Israel and being held by Hamas.
"The packages of medicine that were found were sealed and had not been transferred to the hostages," the military said.
Hamas dismisses Israeli allegations, saying they serve as a pretext to destroy the healthcare system.
The hospital was still sheltering scores of patients suffering from war wounds and from the worsening health crisis in Gaza, but there was no power and not enough staff to treat them all, health officials said.
"It's gone completely out of service. There are only four medical teams - 25 staff - currently caring for patients inside the facility," he said.
The military said the raid occurred "without harming patients and medical staff, and in accordance with the values of the IDF and international law".
Qidra said water supply to the hospital had halted because generators had been out of action for three days, sewage was flooding emergency rooms and the remaining staff had no way of treating intensive care patients.
A lack of oxygen supplies - also a result of having no power - had caused the deaths of at least seven patients, he said.
The Gaza war began when Hamas, which controls Gaza, sent fighters into Israel on Oct. 7, killing 1,200 people, mostly civilians, and seizing 253 hostages, according to Israeli tallies.
The conflict has destabilised the entire Middle East as Hamas's military allies - all Iran-backed paramilitary groups - have targeted Israeli and U.S. interests with missiles and drones.
Most of Gaza's hospitals have been put out of action by fighting and lack of fuel, leaving a population of 2.3 million without proper healthcare.
Israel has raided medical facilities alleging that Hamas keeps weapons and hostages in hospitals. Hamas operates across densely-populated Gaza but denies it uses hospitals for cover.
The international community says hospitals must be protected in line with international law.
The World Health Organization urged Israel to grant its staff access to the hospital, where it said a week-long siege and raids by Israeli forces searching for Hamas had stopped them from helping patients.
"Both yesterday and the day before, the @WHO team was not permitted to enter the hospital to assess the conditions of the patients and critical medical needs, despite reaching the hospital compound to deliver fuel," WHO head Tedros Adhanom Ghebreyesus said on X.
The Israeli military said its special forces were operating in and around Nasser Hospital, and had killed dozens of Palestinian and seized a large amount of weapons in fighting across Gaza over the past day.
The military said this week it was hunting for Hamas in Nasser and had arrested at least 100 suspects on the premises, killed gunmen near the hospital and found weapons inside it.
STRIKES KILL DISPLACED IN RAFAH
Israel's assault on Gaza began in the north and has moved south as Palestinians have fled, many crammed into tents around southern cities including Khan Younis and Rafah, the Gaza-Egypt border town which is the only crossing not controlled by Israel.
More than half Gaza's population has been pushed into Rafah and Israeli plans to storm the city have prompted international concern, including the United States, Israel's principle ally and weapons supplier.
Israeli planes carried out attacks on two areas in Rafah on Sunday, including an empty building near the border with Egypt, local residents and Hamas media officials said.
The second of the two strikes hit an open space where displaced people were sheltering, killing six people, local medics said.
Israel's Prime Minister Benjamin Netanyahu, embattled at home over the government's failure to stop the Oct. 7 attack and under pressure to get the remaining hostages released, on Saturday pledged to push on with the military campaign.
Netanyahu has rejected internationally-backed attempts to negotiate a ceasefire as Arab and Western countries call for a lasting solution to the core of the Israeli-Palestinian conflict in the creation of a Palestinian state in the West Bank and Gaza alongside Israel.
His cabinet on Sunday formalised its opposition to what it called the "unilateral recognition" of Palestinian statehood.
The Palestinian health ministry said two Palestinians were killed by Israeli forces in the West Bank.
