Britain is making a further £3 million available to allow a rapid response by aid workers in Gaza, as questions were being asked about whether military equipment manufactured in the UK has been used in Israel's offensive on the Palestinian enclave.
The cash - which brings UK humanitarian support during the current conflict to £13 million - was released as Deputy Prime Minister Nick Clegg issued a plea for the Israeli Government to halt its military operations and talk to Hamas.
The 26-day-old offensive, launched in response to rockets fired by Hamas from Gaza into Israel, has now killed more than 1,650 Palestinians - mostly civilians - with more than 8,000 wounded, according to local officials in what International Development Secretary Justine Greening described as "nothing short of a humanitarian catastrophe".
Israel has lost 63 soldiers and three civilians, its highest death toll since the 2006 Lebanon war.
Israeli troops were forcing deeper into Gaza and carried out fresh strike Saturday following the reported capture of Israeli soldier Second Lieutenant Hadar Goldin.
Hamas has denied it is holding Lt Goldin - who is believed to have spent some years living in Cambridge - and suggested he may have been killed by an Israeli strike.
The UK's Department for International Development said that since the Israeli offensive began on July 8, 136 schools - some serving as shelters - 24 hospitals and clinics and 25 ambulances have been damaged or destroyed, while eight UN aid workers and at least two Palestinian Red Crescent volunteers have now been reported as killed.
Some 40% of the sixth most densely populated area on Earth is now a war zone, with a quarter of the Gazan population displaced.
But as Britain gives more aid to those suffering in Gaza, documents obtained by the Campaign Against Arms Trade (CAAT) under the Freedom of Information Act showed that arms export licences worth £42 million have been granted to 130 British defence manufacturers since 2010 to sell military equipment to Israel, including £10 million in the last 10 months.
According to The Independent, the items covered range from weapons control and targeting systems to ammunition, drones and armoured vehicles.
Andrew Smith, of CAAT, told the newspaper: "There must be an immediate embargo on all arms sales and military collaboration with Israel. When governments sell weapons into war zones they cannot absolve themselves of responsibility for what happens when they are used."
And Labour MP Katy Clark said that ministers must establish whether any of the weapons or components have been used in Gaza, adding: "By refusing to investigate this vital question the British Government are trying to bury their heads in the sand. This is a shameful approach to take and frankly makes the Government look as if it has something to hide.
"The British public have the right to know the level of support which the United Kingdom has provided to the Israeli armed forces through arms sales."
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A Government spokesman said: "We are currently reviewing all existing export licences to Israel. All applications for export licences are assessed on a case by case basis against strict criteria. We will not issue a licence if there is a clear risk that the equipment might be used for internal repression, or if there is a clear risk that it would provoke or prolong conflict."
The activation of Britain's Rapid Response Facility will allow pre-approved non-governmental organisations (NGOs) with a track record of operating successfully in Gaza to access funds within a few days. Priority is being given to projects to provide clean water and sanitation following extreme water shortages, as well as emergency healthcare, clearance of unexploded ordnance and counselling and care for civilians, particularly women and children.
Ms Greening said: "What is happening in Gaza is nothing short of a humanitarian catastrophe. Families are being driven from their homes by the fighting and the number seeking shelter and safety keeps growing. The £10 million we have released over the last two weeks is already helping to save lives and the UK will continue to stand by those in desperate need.
"Humanitarian workers putting their own lives at risk must be able to get on with their life-saving work. All sides to the fighting must give them safe, unimpeded access and we will keep pushing hard for a lasting and durable ceasefire.
Writing in The Guardian, Mr Clegg said it was "difficult to deny that Israel's military action appears disproportionate and, combined with the Gaza blockade, is resulting in the collective suffering of the Palestinian people." Hamas, which has ruled Gaza since 2007, "cannot escape blame" for the situation, as it has shown itself willing to sacrifice its own people by placing fighters and military equipment among the civilian population, he said.
"If Israel wants to secure lasting safety for its people, it must use political will, not military might, to break the cycle of violence," said the Liberal Democrat leader.
"Prime minister Binyamin Netanyahu must now put Israel's long-term, strategic self-interest ahead of short-term, tactical military gains. It is time for the Israeli government to talk to the Hamas political leadership in Gaza. Israel's refusal to engage with president Mahmoud Abbas's new unity government, because it includes Hamas, must be reversed."
He was backed by former Lib Dem leader and peace envoy Lord Ashdown, who said there was "no question" that Israel's military action was disproportionate, telling BBC Radio 4's Today: "You have to call a spade a spade. Is it disproportionate? Yes it is, there's no question about it."
Lord Ashdown said: "Neither side can blast their way to victory, so there is only one way to get peace now, and that is for the sides to sit down and start talking to each other. Hamas has to be at the table."
Labour leader Ed Miliband said that David Cameron had put himself "in the wrong place" over Gaza by failing to make clear to Israel from the start that its incursion would not resolve its problems with rocket attacks launched by Hamas from the territory.
Mr Miliband told LBC radio: "If I was David Cameron... I would be spending my time on doing everything I can to put pressure on both sides to have that ceasefire that is required.
"I think he is in the wrong place on this, because I agree with him about Hamas - Hamas is a terrible and disgusting organisation - but I think he should have said from the outset that this incursion by Israel into Gaza was not going to solve the problem. It isn't solving the problem, it's making it worse.