The Israeli military has said it has freed two hostages, during which it launched a “wave of attacks” on the southern city of Rafah in an operation that health officials in Gaza said killed at least 67 Palestinians. The raid was celebrated in Israel, which has been seeking the release of more than 100 captives held by Hamas and other militant groups. But the operation also brought down heavy airstrikes on Rafah, the city on the southern edge of the Gaza Strip, where 1.4 million displaced Palestinians are sheltering. Women and children were among those killed in the Israeli strikes, according to Dr Marwan al-Hams, the director of the Abu Youssef al-Najjar hospital, and dozens were wounded. Residents said two mosques and several houses were hit in more than an hour of strikes by Israeli warplanes, tanks and ships, causing widespread panic among people who had been asleep. The two hostages were freed during a raid by special forces in Gaza’s southern Rafah neighbourhood, said the Israel Defense Forces (IDF). They were taken to Sheba hospital in central Israel and were confirmed by doctors to be in “good condition”, a statement from the hospital said. The hostages were named by the IDF as Fernando Simon Marman, 60, and Louis Har, 70, who were taken from the Nir Yitzhak kibbutz in the 7 October Hamas attacks. The pair, who are dual Argentine-Israeli citizens, were abducted alongside three relatives who were freed in November as part of a temporary ceasefire deal. A photograph released to the media showed the two men in hospital, sitting on a sofa alongside relatives. Har’s son-in-law, Idan Begerano, who saw them at the hospital, said the two men were thin and pale but communicating well and aware of their surroundings. The Israeli military spokesperson Daniel Hagari said the IDF had conducted a “wave of attacks” on Rafah during the operation. He said that at 1.49am local time, special forces broke into a building in Rafah where the two hostages were being held in a second-floor apartment, under guard from Hamas gunmen. He said members of the rescue team shielded the hostages with their bodies as a heavy battle erupted in several places at once with the gunmen. Hagari added that, about a minute later, Israeli forces conducted airstrikes “to allow the force to cut off contact and hit the Hamas terrorists in the area” and take the hostages out safely. After the mission, the Israeli prime minister, Benjamin Netanyahu, stressed that “only continued military pressure, until total victory, will bring about the release of all of our hostages”. Hamas said in a statement that the Israeli attack on Rafah was a continuation of the “genocidal war” and the attempted forced displacement that Israel has waged against the Palestinian people. There were conflicting reports on the number of casualties. Reuters reported that 67 Palestinians were killed, while Agence France-Presse said “around 100” had died. Emad, a father of six, told Reuters: “It was the worst night since we arrived in Rafah last month. Death was so near as shells and missiles landed 200 metres from our tent camp.” The raid comes amid international concerns about the prospect of a ground offensive on the southern city. On Monday, Tedros Adhanom Ghebreyesus, the head of the World Health Organization, said: “I am especially concerned by the recent attacks on Rafah where the majority of Gaza’s population has fled the destruction.” The US president, Joe Biden, on Sunday told Netanyahu that Israel should not launch a military operation in Rafah without a credible plan to ensure the safety of the roughly 1 million people sheltering there, the White House said. Netanyahu has appeared determined to push ahead with a ground offensive against Rafah but has claimed Israel will provide safe passage to the displaced Palestinians sheltering there. Despite mounting warnings from aid agencies and the international community that an assault on Rafah would be a catastrophe, Netanyahu has reiterated his intention to extend Israel’s military operation against Hamas. The militant group stated that a new advance into Rafah would “blow up” continuing negotiations to return hostages in exchange for a ceasefire. “We’re going to do it,” Israel’s prime minister told ABC News in an interview aired on Sunday. “We’re going to get the remaining Hamas terrorist battalions in Rafah, which is the last bastion, but we’re going to do it. We’re going to do it while providing safe passage for the civilian population so they can leave.” As Israeli forces have expanded ground operations steadily southwards in their war against Hamas over the past four months, Rafah has become the last refuge for more than half of the strip’s population of 2.3 million. It remains unclear where the large number of people pressed up against the border with Egypt in overcrowded makeshift tent camps can go. When asked, Netanyahu said Israel was “working out a detailed plan”. He said: “We’re not cavalier about this. This is part of our war effort to get civilians out of harm’s way. It’s part of Hamas’s effort to keep them in harm’s way.” The prime minister has not provided details or a timeline on a ground invasion in Rafah, which Israel previously designated as a safe zone. Israel’s war in Gaza, now in its fifth month, was sparked by Hamas’s unprecedented attack on 7 October in which 1,200 people were killed and a further 250 taken as hostages. The Gaza health ministry, which is controlled by Hamas, said on Monday that 28,340 Palestinians had been killed and 67,984 injured in Israeli strikes on the territory since 7 October.