Israeli leaders were preparing Monday for military operations in Gaza's southern city of Rafah, where most of the Palestinian territory's population has fled after six months of fighting.
Talks in Cairo aimed at brokering a truce have made "significant progress", with more negotiations expected in the coming days, Egyptian state-linked outlet Al-Qahera reported Monday.
International pressure has mounted on Israel to bring an end to the war, with its main ally the United States last week demanding a ceasefire and hostage release deal along with ramped-up aid deliveries.
Israel pulled its forces out of the southern Gaza Strip on Sunday. But Israel's Defence Minister Yoav Gallant said troops had left the city of Khan Yunis "to prepare for future missions, including... in Rafah".
Prime Minister Benjamin Netanyahu said Israel was "one step away from victory".
After troops left areas in and around the largely destroyed Khan Yunis, a stream of displaced Palestinians walked there, hoping to return to their homes from temporary shelters in Rafah, a little further south. Muhammad Yunis, 51, a Palestinian in northern Gaza, saw nothing but loss.
"Isn't the bombing, death and destruction enough?" he asked.
"There are bodies still under the rubble. We can smell the stench."
In Cairo, Al-Qahera reported "significant progress being made on several contentious points of agreement", citing a high-ranking Egyptian source. The outlet said Qatari and Hamas delegations had left Cairo and were expected to return "within two days to finalize the terms of the agreement". US and Israeli delegations were due to leave the Egyptian capital "in the next few hours" and consultations were expected to continue over the next 48 hours, it added.
In a speech to mark six months since Hamas's attack, Netanyahu told his cabinet that "Israel is ready for a deal", adding that "there will be no ceasefire without the return of hostages".
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