Palestinians queue to fill up on water in the sweltering heat in the Mawasi area of Khan Yunis in the southern Gaza Strip . AFP
Past calls to resettle Gazans outside of the war-battered territory, including from US President Donald Trump, have sparked concern among Palestinians and condemnation from the international community.
Netanyahu defended his war policies in a rare interview with Israeli media, broadcast shortly after Egypt said Gaza mediators were leading a renewed push to secure a 60-day truce.
The premier told Israeli broadcaster i24NEWS that "we are not pushing them out, but we are allowing them to leave".
"Give them the opportunity to leave, first of all, combat zones, and generally to leave the territory, if they want," he said, citing refugee outflows during wars in Syria, Ukraine and Afghanistan.
In the Gaza Strip, Israel for years has tightly controlled the borders and barred many from leaving.
"We will allow this, first of all within Gaza during the fighting, and we will certainly allow them to leave Gaza as well," Netanyahu said.
For Palestinians, any effort to force them off their land would recall the "Nakba", or catastrophe -- the mass displacement of Palestinians during 1948 war.
Netanyahu has endorsed Trump's suggestion this year to expel Gaza's more than two million people to neighbouring countries, while far-right Israeli ministers have called for their "voluntary" departure.
Cairo talks
Israel's plans to expand its offensive into Gaza City come as diplomacy aimed at securing an elusive ceasefire and captives release deal in the 22-month-old war has stalled for weeks, after the latest round of negotiations broke down in July.
Egypt's Foreign Minister Badr Abdelatty announced that Cairo was "working very hard now in full cooperation with the Qataris and Americans", aiming for "a ceasefire for 60 days, with the release of some hostages and some Palestinian detainees, and the flow of humanitarian and medical assistance to Gaza without restrictions, without conditions".
Hamas said in a statement early Wednesday that a delegation of its leadership had arrived in Cairo for "preliminary talks" with Egyptian officials.
A Palestinian source earlier told AFP that the mediators were working "to formulate a new comprehensive ceasefire agreement proposal" that would include the release of all remaining hostages in Gaza "in one batch".
Netanyahu said in his interview he would oppose the staggered release of captives, and instead would "want to return all of them as part of an end to the war -- but under our conditions".
News of the potential truce talks came as Gaza's civil defence agency said Israel has intensified its air strikes on Gaza City in recent days, following the security cabinet's decision to expand the war there.
UN-backed experts have warned of widespread famine unfolding in the territory, where Israel has drastically curtailed the amount of humanitarian aid it allows in.
Netanyahu is under mounting domestic pressure to secure the release of the remaining captives-- 49 people including 27 the Israeli military says are dead -- as well as over his plans to expand the war.
Israel's war has killed at least 61,599 Palestinians, amostly women and children.
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