Israel-Gaza live updates: Israel 'deepening the war' in Gaza: Netanyahu

National Security Council spokesperson John Kirby said there have been "serious talks and negotiations over trying to get back into another pause and a hostage exchange."

“It won’t get lost over the holidays. We're working on it every single day, almost every hour of every day," Kirby said.

Kirby said the Israelis recognize that "they need to transition" to a lower intensity stage of fighting.

"They have said themselves that they realize they're going to have to transition from a higher intensity level of operations, such as what they're doing now, to something a bit lower intensity. They will decide when, they will decide what lower intensity looks like, and what that means," he said.

Kirby said the U.S. is "not dictating the terms and timelines to the Israelis" on moving to lower intensity military operations.

-ABC News’ Lauren Peller

The Israel Defense Forces said it has destroyed a network of tunnels found in Hamas' "Elite Quarter" in Gaza City.

The IDF said the tunnels connected hideouts and homes belonging to Hamas leaders.

A senior Israeli official said hostage negotiations have stopped for now. This comes after the Israeli official said there'd been "some kind of progress," noting that the Israelis met with the Qataris "twice already" over the last week.

As the humanitarian crisis in Gaza worsens, the World Health Organization said Gaza has no fully functioning hospitals left.

Twenty-three hospitals are not functioning at all, nine are partially functioning and four are minimally functioning, the WHO said.

“Gaza’s health system needs urgent resuscitation,” the organization stressed, and the WHO again called for a cease-fire.