Israel’s military said on Sunday that it was reducing its numbers of soldiers from southern Gaza, leaving just one brigade in the area.
The military stressed a "significant force" would remain in Gaza.
"This is another stage in the war effort," Israel Defense Forces spokesman Lt Col Peter Lerner told the BBC.
The pull-out is being interpreted as tactical, rather than a sign the war may be moving closer to its end.
Meanwhile, Israel and Hamas said they had both sent delegations to Cairo to join fresh ceasefire negotiations.
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