Iran's Supreme leader Khamenei denies involvement in Hamas attack on Israel

Supreme leader Ayatollah Ali Khamenei on Tuesday denied any Iranian involvement in Hamas's shock weekend attack on Israel despite its strong support for the Palestinian militant group.

"The supporters of the Zionist regime (Israel) and some people in the usurping regime have been spreading rumours over the past two or three days, including that Islamic Iran was behind this action. They are wrong," Khamenei said in a speech at a military academy.

"Of course, we defend Palestine, we defend the struggles," he added, urging "the whole Islamic world" to "support the Palestinians."

Khamenei said Israel has suffered an "irreparable failure" on both "military and intelligence" fronts.

"Everyone has spoken of the failure, I put the emphasis on its irreparability," he said.

Iran took the lead on Saturday in celebrating the Hamas assault in which at least 1,500 gunmen stormed the border before carrying out a bloody rampage through Israeli communities that left more than 900 dead.

The Israeli army said it was the single deadliest event in the nation's history and has responded with a ferocious bombardment of Gaza where officials say at least 687 people have been killed.

Israel pounded Hamas targets in Gaza Tuesday and said the bodies of 1,500 Islamist militants were found in southern towns recaptured by the army in gruelling battles near the Palestinian enclave.

Prime Minister Benjamin Netanyahu has warned Israel's military campaign following Saturday's surprise mass onslaught was only the start of a sustained war to destroy Hamas and "change the Middle East".

Fears of a regional conflagration have surged amid expectations of an Israeli ground incursion into the crowded Palestinian Gaza Strip from where Hamas launched its land, air and sea attack on the Jewish Sabbath.

The death toll in Israel has surged above 900 from the worst attack in the country's 75-year history, while Gaza officials have reported 687 people killed so far.