Israel on Sunday pulled its troops out of southern Gaza, including from the city of Khan Younis, after six months of fierce fighting with Hamas that left the area devastated.
But the military said a "significant force" will continue to operate in the rest of the besieged Gaza Strip.
"The 98th commando division has concluded its mission in Khan Younis," the army said in a statement to Agence France-Presse.
"The division left the Gaza Strip in order to recuperate and prepare for future operations.
Israeli security expert Omer Dostri said the withdrawal was purely tactical and did not mean the conflict was anywhere near over.
In a cabinet meeting on Sunday, Prime Minister Benjamin Netanyahu said Israel was "one step away from victory" in the Gaza conflict and vowed there would be no truce until Hamas frees all hostages.
"We are one step away from victory," Netanyahu said. "But the price we paid is painful and heartbreaking."
As the bloodiest conflict between Israel and Palestine passed the half-year mark, Israel's government has faced a growing international backlash against its military campaign.
Arab states and aid groups are demanding that Israel comply with a United Nations cease-fire resolution and end atrocities that have exacerbated the humanitarian crisis in Gaza, as its operation has ignored UN Security Council Resolution 2728.
UN Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator Martin Griffiths lamented on Saturday that "we have arrived at a terrible milestone" and that "the end of this war is long overdue".
"It is not enough for six months of war to be a moment of remembrance and mourning. It must also spur a collective determination that there be a reckoning for this betrayal of humanity."
On Friday, Abdulaziz Al-Wasil, Saudi Arabia's permanent representative to the UN, called on the Security Council to adopt a resolution "to ensure that Israel, the occupying power", abide by a cease-fire, and to give access to humanitarian aid and "put an end to the evil aggression on the Palestinian people and provide protection for them".
Months of stop-start cease-fire talks have made no headway since a weeklong truce in November in which some hostages were exchanged for Palestinian prisoners detained by Israel.
In a new push in Cairo, CIA Director Bill Burns and Qatar's Prime Minister Sheikh Mohammed bin Abdulrahman bin Jassim Al-Thani were expected to join Egyptian officials for indirect talks from Sunday between the Israeli and Hamas delegations, Egypt's Al-Qahera News said.
The attempt came after Israel's military made a rare admission of wrongdoing and said it was dismissing two officers over the killing of seven aid workers in Gaza last week.
During previous rounds of indirect talks, Hamas demanded a complete cessation of the conflict, and Israel agreed only to a temporary cease-fire and rejected Hamas' request to allow displaced civilians to return home.
Resolution 2728, adopted by the Security Council on March 25, demands an immediate cease-fire for Ramadan respected by all parties, leading to a sustainable cease-fire.
Under the UN Charter, the Security Council can order military action and nonmilitary measures such as sanctions to ensure its resolutions are implemented and to restore international peace and security.
In a terse phone call with Israel's Prime Minister Benjamin Netanyahu on Thursday, US President Joe Biden demanded vastly greater aid deliveries into the territory now threatened by famine.
Britain's Prime Minister Rishi Sunak demanded that "this terrible conflict must end".
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