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This afternoon political parties joined Mr Key is calling for an immediate ceasefire and a long-term solution between Israel and Hamas -- though Mr Key said further action such as sanctions was unlikely.
He said most of the 1300 people killed in fighting between the two regions were civilians.
"These are people that just can't get out of harm's way. I think for most people watching this they would just say it's soul-destroying.
"You've got young children, you've got families - this is a situation which has to end and common sense has got to prevail."
His comments followed reports of further attacks on UN-run schools in Gaza where displaced people were seeking refuge.
Amnesty International described the latest school bombing -- which killed 20 people -- as a possible war crime that required independent investigation.
United Nations officials said it was a disgrace to the world; the UN said it told Israel the position of the school 17 times to ensure it was not targeted.
The strike is the sixth attack on a UN-run school in Gaza since Operation "Protective Edge" began on July 8.
Asked about the apparent targeting of schools, Mr Key said: "If they are, it's very worrying. I don't have all the facts … but I just know well over 1300 people have lost their lives. It's a blot on the world as we currently know it and it's got to end."
He said Israel's argument that people could get out of harm's way if they were given notice was "a bit flawed in its logic" because most of the affected people were refugees who had nowhere to go.
But he stopped short of singling out Israel for condemnation, saying that both sides needed to cease their attacks and find a long-term solution.
"People can say disproportionately … Israel has better capability and more force. But in principle both sides really have to stop."
Labour's foreign affairs spokesman David Shearer, who used to work in Israel for the UN, said Israel's attacks were disproportionate and indiscriminate.
Gaza was essentially a prison camp for Palestinians with 40 per cent unemployment, collapsed infrastructure and food shortages, he said.
"These conditions will inevitably sow the seeds for further conflict if they're not resolved.
"It is not normal for 1.6 million Palestinians to be blockaded into a narrow strip of land, a situation that aptly fits its description as the largest prison camp in the world."
Green Party global affairs spokesperson Kennedy Graham called on the Government to condemn Israel and consider expelling its ambassador to send a strong message.
"We understand that the Israel-Palestine situation is highly complex and that Israel has certain rights as a UN member state, but its bombardment of Gaza in the past few weeks violates the laws of humanity and has to stop."
Dr Graham was meeting with Israeli ambassador Yosef Livne tomorrow to convey his views.
The attack on the UN school came a day after the Gaza Strip's sole power plant was struck and badly damaged.
Philip Luther, Amnesty International director of the Middle East and North Africa programme, said there was no justification for targeting a civilian structure.
"The strike on the power plant, which cut off electricity and running water to Gaza's residents and numerous hospitals, has catastrophic humanitarian implications and is very likely to amount to a war crime."
Mr Key said it was difficult to impose sanctions unless the UN Security Council made a resolution.
Asked about the US role in the conflict, he said Barrack Obama's administration appeared to be "more reserved" in its support of Israel compared to previous administrations.
- Derek Cheng and Isaac Davison of the NZ Herald