Footage of the aftermath released by the Civil Defence agency showed rescuers recovering badly burned remains from the damaged home.
The Israeli military said it had “struck a number of suspects who were identified operating from a structure” near its troops.
“The Khan Yunis area is a dangerous warzone. The claim regarding harm to uninvolved civilians is under review.”
The army had issued an evacuation warning for the city on Monday.
The children’s funeral took place at Nasser Hospital, AFP footage showed.
Muneer Alboursh, director general of the health ministry in Hamas-run Gaza, said on X that the strike happened shortly after Hamdi Al-Najjar returned home from driving his wife to work.
“This is the reality our medical staff in Gaza endure. Words fall short in describing the pain,” he said, accusing Israel of “wiping out entire families”.
Fresh strikes
Bassal told AFP that Israeli strikes killed at least 15 people on Saturday across Gaza.
He said the dead included a couple who were killed with their two young children in a pre-dawn strike on a house in the Amal quarter of Khan Yunis.
To the west of the city, at least five people were killed by a drone strike on a crowd that had gathered to wait for aid trucks, he added.
At Nasser Hospital, tearful mourners gathered Saturday around white-shrouded bodies outside.
“Suddenly, a missile from an F-16 destroyed the entire house, and all of them were civilians – my sister, her husband and their children,” said Wissam Al-Madhoun.
“What did this child do to [Israeli Prime Minister Benjamin] Netanyahu?”
The military said that over the past day the air force had struck more than 100 targets across the territory.
Israel resumed operations in Gaza on March 18, ending a two-month ceasefire.
Gaza’s health ministry said Saturday that at least 3747 people had been killed in the territory since then, taking the war’s overall toll to 53,901, mostly civilians.
‘Attempt to sow panic’
United Nations chief Antonio Guterres said on Friday that Palestinians were enduring “the cruellest phase” of the war in Gaza, where Israel’s lengthy blockade has led to widespread shortages of food and medicine.
Limited aid deliveries to the Gaza Strip restarted on Monday for the first time since March 2.
The Gaza City municipality, meanwhile, warned Saturday of “a potential large-scale water crisis” because of a lack of supplies needed to repair damaged infrastructure.
Hamas’ October 2023 attack on Israel that triggered the war resulted in the deaths of 1218 people, mostly civilians, according to an AFP tally based on official figures.
Militants also took 251 hostages, 57 of whom remain in Gaza including 34 the Israeli military says are dead.
Demonstrators gathered yet again in Tel Aviv on Saturday night for their regular protest calling for the captives’ freedom, carrying a giant banner that read “Save the hostages, end the war”.
“We want the war to end now because we see… that the war will not lead to the release of the hostages, and that it will bring more death, more misery on both sides,” demonstrator Jonathan Adereth told AFP.
Early Saturday morning (local time), Israel’s National Cyber Directorate said it had received “numerous inquiries” about citizens “receiving phone calls in which recordings are played featuring the voice of a hostage, sounds of explosions and screams”.
Israeli media said the calls featured audio apparently taken from a video of hostage Yosef Haim Ohana published by Hamas this month.
“This is an attempt to sow panic and confusion among the public,” the directorate said of the calls, adding “the matter is under investigation”.
– Agence France-Presse