Israeli Defence Minister Israel Katz has ordered preparations for a huge camp to house 600,000 displaced Palestinians in southern Gaza, Israeli media reported on Monday.
Katz said the move was intended to weaken the power of the Palestinian militant group Hamas over the population in the sealed-off coastal territory.
The minister said plans were being developed for a "humanitarian city" on the ruins of Rafah, which has been largely destroyed in the ongoing war.
Hundreds of thousands of Palestinians currently living in tents in the al-Mawasi area are to be accommodated in the new camp.
Katz said the camp would be built during the 60-day ceasefire that Israel and Hamas are currently in negotiations to seal.
The area would be administered by unspecified "international partners," with the Israeli military only providing security.
Those entering the camp would undergo a security check to prevent Hamas fighters from infiltrating the area.
Katz also said the camp would assist in plans for Palestinian residents to leave Gaza, which critics believe amount to forced expulsion.
The Israeli government has repeatedly announced its intention to push for the "voluntary" emigration of a massive proportion of the local population.
Just over 2 million people live in the territory, most of whom have lost their residence during the conflict.
No country in the world has declared its willingness to take in Palestinians.
Radical forces in Israel, including some far-right ministers in Prime Minister Benjamin Netanyahu's government, have openly discussed the forced deportation of the Gaza population and the establishment of Jewish settlements in the area.
Israeli Defence Minister Israel Katz is pictured in Jerusalem. Hannes P Albert/dpa