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The Israeli military said it had rescued two of the hostages seized by Hamas after a “complex operation” early on Monday morning involving special forces in the southern Gaza city of Rafah.

The Israeli raid comes amid growing fears internationally of a wider military incursion into a city teeming with more than 1mn Gazans displaced from their homes, which Israeli officials claim is the last major population centre controlled by Hamas.

The two rescued Israeli hostages, Fernando Simon Marman, 61, and Louis Har, 70, who were taken by the Palestinian militant group during its October 7 attack from the Nir Yitzhak kibbutz, were in good medical condition in an Israeli hospital, Israel Defense Forces spokesperson Richard Hecht said.   

The rescue operation had involved several of Israel’s elite military, intelligence and police counterterror units, which raided the second floor of a building in the centre of Rafah in which the hostages were held, Hecht said. Israel also launched air strikes on the surrounding buildings, including on a local Hamas battalion and other militant command and control sites.

Health officials in Gaza said more than 60 Palestinians were killed overnight during Israeli air strikes in Rafah. The IDF estimated that at least three of the militants who were holding the hostages were killed during the raid.

“This was a complex operation . . . We were waiting for the right conditions,” Hecht said.

At least 1,200 Israelis were killed and about 250 more taken hostage during the October 7 attack that sparked the current war, according to Israeli figures. More than 100 of the hostages were released in exchange for Palestinian prisoners during a week-long ceasefire in November.

According to Israeli officials, 134 hostages remain in Gaza, of whom at least 31 have been confirmed dead by the IDF. Despite numerous efforts, the Israeli military had previously successfully managed to rescue only one captive — a soldier in late October.

Israeli Prime Minister Benjamin Netanyahu praised the “daring action” to release the hostages, adding: “Only continued military pressure, until total victory, will bring about the release of all of our hostages. We will not miss any opportunity to bring them home.”

More than 28,000 Palestinians have been killed in Gaza during the past four months of war, according to health officials in the Hamas-controlled territory. About 80 per cent of the enclave’s 2.3mn residents are estimated to have been displaced from their homes, according to international aid organisations. More than half are now sheltering in Rafah.

The fate of the city has increased strains between Netanyahu’s government and US President Joe Biden’s administration.

In a call between Biden and Netanyahu on Sunday, the US president demanded that any large-scale military operation in Rafah “should not proceed without a credible and executable plan for the safety of and support for the more than 1mn people sheltering there”.

Netanyahu has in recent days made clear that victory over Hamas would require dismantling the militant group’s remaining four battalions in Rafah and severing its control over the border crossing with Egypt that is the besieged strip’s commercial and humanitarian lifeline.

“Those who say that under no circumstances should we enter Rafah are basically saying, ‘Lose the war, keep Hamas there’. And Hamas has promised to do the October 7 massacre over and over and over again,” Netanyahu said in an interview with ABC News on Sunday.