Destroyed buildings in an area targeted during Israeli strikes in Khan Yunis in the southern Gaza Strip. AFP
The defence chief said in a statement that Israel would expand its presence in Gaza.
The expanded operation would "seize large areas that will be incorporated into Israeli security zones", he said, without saying how much territory Israel would take.
The announcement comes after he said last week that the Israeli occupation army would soon "operate with full force" in additional parts of Gaza, which is facing a genocidal Israeli war since 2023.
In February, Katz announced plans to set up an agency for the "voluntary departure" of Palestinians from the Gaza Strip.
That came after Israel lauded a proposal from US President Donald Trump to take over the Palestinian territory after expelling its 2.4 million inhabitants.
Israel resumed intense bombing of Gaza on March 18 and then launched a new ground offensive, ending a nearly two-month ceasefire with Hamas.
Gaza's civil defence agency said at least 15 people, including children, were killed in Israeli air strikes on homes in Khan Yunis and the Nuseirat refugee camp at dawn on Wednesday.
The health ministry in the Gaza Strip said on Tuesday that 1,042 people have been killed in the territory since Israel resumed its brutal war.
UN condemns Israeli attack
The idea of forcing the Palestinians to leave their homeland for neighbouring countries, including Egypt and Jordan, was first floated by Trump.
It has since been seized on by extremist Israeli politicians, including Prime Minister Benjamin Netanyahu, who has vowed to implement it.
Netanyahu has rejected domestic criticism that his government- one of the most right-wing in Israel's history- was not doing enough to secure the release of captives.
"We are negotiating under fire... We can see cracks beginning to appear" in Hamas's positions during ceasefire talks, he told his cabinet.
In the "final stage", Netanyahu said "Hamas will lay down its weapons. Its leaders will be allowed to leave".
Hamas has expressed a willingness to step down from ruling Gaza but has warned its weapons are a "red line".
Egypt, Qatar and the United States are attempting to again broker a ceasefire and secure the release of Israelis still held in Gaza.
A senior Hamas official said on Saturday that the group had approved a new ceasefire proposal put forward by mediators and urged Israel to support it.
Netanyahu's office confirmed receipt of the proposal and but Israel rejected it again and submitted a counterproposal in response.
The details of the latest mediation efforts have not been disclosed.
The United Nations on Tuesday strongly condemned an Israeli army attack on an emergency convoy that killed 15 aid workers and medical personnel and demanded an investigation.
"I condemn the attack by the Israeli army on a medical and emergency convoy on 23 March resulting in the killing of 15 medical personnel and humanitarian workers in Gaza," UN High Commissioner for Human Rights Volker Turk said.
The war was sparked on October 7, 2023.
Israel's campaign has killed at least 50,399 Palestinians in Gaza, the majority of them women and children, according to the latest health ministry toll.
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