An Israeli military official said that it would not apply to the town of Rafah and that Israeli troops would respond if they were attacked, BBC reported.
Earlier, UN Secretary General Ban Ki-moon described an Israeli strike near a UN-run school in Gaza as "a moral outrage and a criminal act".
Palestinian officials said that at least 10 people died in the attack Sunday.
The Israel Defence Forces (IDF) confirmed Sunday that they had begun withdrawing some troops from Gaza, saying it was "extremely close" to completing its mission to destroy a network of tunnels.
Health officials in Gaza said 1,800 Palestinians, most of them civilians, have been killed and more than 9,000 were injured since the conflict began July 8.
Sixty-six Israelis have died, including soldiers and civilians.
A Thai national working in Israel was also killed.