RAFAH, Gaza Strip (AP) _ An Israeli helicopter fired three missiles at a surrounded Palestinian refugee camp early Tuesday, killing at least three people and wounding seven others, residents said.

Minutes later, armored military bulldozers began leveling land in an Israeli-controlled zone next to the Rafah camp on the Egyptian border.

Israeli officials said earlier reports that the bulldozers had entered the camp were incorrect.

The military surrounded the camp on Monday, cutting it off from the rest of Gaza. Residents were fleeing the camp, expecting an Israeli operation there.

The Israeli helicopter fired three missiles at the camp, killing three people and wounding seven, one critically. Hospital officials said at least two of the dead were gunmen, but the wounded were civilians, including a 35-year-old woman.

The Israeli military said the target was a group of armed Palestinians approaching Israeli forces.

Israel Radio reported that troops were prepared to fight from house to house in the camp.

Israeli forces have entered the camp many times during more than three years of conflict, looking for tunnels the Palestinians use to smuggle in weapons under the Egyptian border.

Last week Palestinians blew up an Israeli armored vehicle on the border road next to the camp, killing five soldiers, leading Israel to declare it would widen the buffer zone by tearing down houses in the camp.