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Netanyahu's stark warning came as the Israeli military deployed more troops and ordered civilians in coastal areas to evacuate.
The US is allegedly pressuring Israel to be 'more cautious' in what appears to be its inevitable assault on south Gaza.
Diplomatic efforts are underway to end the war on Gaza, as Israel's offensive continues to result in civilian deaths and displacement in the enclave.
Saturday's losses were among the heaviest for the Israeli military since it began its ground offensive in Gaza on 27 October.
The main UN agency in Gaza has suspended food distribution in Rafah over insecurity concerns, as Israel's offensive pushes into the southern governorate
Israeli officials said additional forces will enter Rafah and 'activity will intensify', despite warnings not to launch an offensive from the US.
Hamas announced the capture of Israeli soldiers amid fighting in Gaza's north, including the release of a video, but Israel has denied the claims.
The World Health Organization chief stated on Tuesday that Israeli tanks had fired on an aid convoy over the weekend.
An independent UN investigator has concluded that Israel is waging a deliberate campaign of starvation against the people of Gaza.
Hamas also said that a new ceasefire deal 'isn't needed' as the Palestinian group had already agreed on the proposal outlined by the US at the end of May.