Israel has begun a partial troop pullout from the Gaza refugee camp it rolled into three days ago, Palestinians and security sources say.
International revulsion was expressed after three days of bloodshed in Rafah in which 41 Palestinians were killed and dozens of homes were demolished by the Israeli army.
In Washington, a senior State Department official said Deputy Prime Minister Ehud Olmert had assured the United States it would not demolish any more homes.
Palestinian witnesses said tanks began moving out of two Rafah neighbourhoods early today but were not completely out of the camp by dawn. They said soldiers were still in control of the camp, but the tank presence was easing.
As troops withdrew, leaving behind torn-up roads and toppled power lines, hundreds of residents in the Brazil neighbourhood returned to their homes to find some 25 had been destroyed while they had taken refuge away from the violence.
"We took our children away and fled for our lives and as you see the houses are completely demolished," Rafah resident Mr Naeema Abu-Jerida said. "Thank God we had time to leave, but we
had no chance to take any of our belongings with us."
An Israeli military source said a "redeployment" was under way. The source said a smaller deployment of troops would remain in the camp for an undefined period of time.
Israel stormed into Rafah on Tuesday after losing 13 soldiers in Gaza ambushes last week.