Far-right allies in Prime Minister Benjamin Netanyahu's coalition have been pushing for a total takeover of Gaza as part of the war to take more Palestinian lands.
The decision came after multiple failed attempts to mediate a ceasefire and amid a rising international outcry over the starvation of Palestinians, including children, amid a deepening humanitarian disaster in the shattered strip.
The World Health Organization said at least 99 people have died from malnutrition in the territory this year, with the figure likely an underestimate.
While Netanyahu said on Thursday Israel intended to take military control of the entire Gaza Strip, the plan approved on Friday focused specifically on sprawling Gaza City, the territory's largest urban centre, located in its north.
Axios, citing an Israeli official, said the plan involved evacuating Palestinian civilians from Gaza City and launching a ground offensive there.
Asked if Israel, whose forces say they already hold about 75% of the slender coastal strip, would occupy all of it, Netanyahu told Fox News Channel’s Bill Hemmer in an interview on Thursday: "We intend to."
But he said Israel wanted to hand over the territory to Arab forces to govern it. He did not elaborate on the governance arrangements or which Arab countries could be involved.
"We don't want to keep it. We want to have a security perimeter. We don't want to govern it. We don't want to be there as a governing body," he said.
According to Reuters, Israeli officials described a previous meeting this week with the head of the occupation army as tense, saying army chief Eyal Zamir had pushed back against expanding Israel's war, which has displaced almost all Gaza's 2.2 million people.
Among the scenarios considered ahead of the security meeting was a phased takeover of areas in Gaza not yet under military control, a government source told Reuters, speaking on condition of anonymity.
Evacuation warnings could be issued to Palestinians in specific areas of Gaza, the person added.
It was unclear whether Netanyahu was foreseeing a prolonged takeover or a short-term operation.
In a statement, Hamas called Netanyahu's comments "a blatant coup" against the negotiation process.
Hamas official Osama Hamdan told pan-Arab network Al Jazeera the group would treat any force formed to govern Gaza as an "occupying" entity linked to Israel.
Arab countries will "only support what Palestinians agree and decide on," a Jordanian official source told Reuters, adding that security in Gaza should be handled through "legitimate Palestinian institutions".
Netanyahu has rejected a return to Gaza of the Western-backed Palestinian Authority, which exercises limited autonomy in parts of the Israeli-occupied West Bank under 1990s interim peace accords.
Earlier this year, Israel and the United States rejected an Egyptian proposal, backed by Arab leaders, that envisaged the creation of an administrative committee of independent, professional Palestinian technocrats entrusted with the governance of Gaza after the war.
The White House had no immediate comment on Netanyahu's announcement. President Donald Trump has declined to say whether he supported or opposed a potential full military takeover of Gaza by Israel.
The Israeli plan drew criticism from British Prime Minister Keir Starmer, who said it was "wrong" and "will only bring more bloodshed" as Israel has killed over 61,000 Palestinians in Gaza, mostly children and women since October 2023.
"This action will do nothing to bring an end to this conflict or to help secure the release of the hostages," said Starmer,
United Nations rights chief Volker Turk similarly said that "the Israeli Government's plan for a complete military takeover of the occupied Gaza Strip must be immediately halted".
Israeli opposition leader Yair Lapid denounced the cabinet's move on Friday, calling it "a disaster that will lead to many other disasters".
Gaza residents said they feared for the worst, as they braced for the next onslaught.
"They tell us to go south, then back north, and now they want to send us south again. We are human beings, but no one hears us or sees us," Maysa al-Shanti, a 52-year-old mother of six, told AFP.
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