Israel's Erez crossing into Gaza - The waste leak added to controversy over the humanitarian situation with growing international anger at Israel's refusal to accept there is a crisis.
Sewage has long been a major concern in Gaza where the antiquated pumping system is held together with a fragile network of temporary pumps and generators.
Oxfam reported the north Gazan town of Beit Hanoun was experiencing serious sewage flooding after generators that run the local pumping station ran out of diesel.
Israel is not allowing diesel into the Gaza Strip although it does allow in some industrial diesel for Gaza's sole power station to run for a few hours each day.
The amount of industrial diesel allowed in by Israel is considerably less than the delivery ordered by the Israeli supreme court after an action brought by human rights campaigners.
Sadi Ali, project manager for the Palestinian Water Authority, said the health risk from sewage on the streets was clear.
"There is a risk of the spread of all sorts of water borne diseases such as dysentery and cholera,'' he said.
He revealed a sewage project supported by Tony Blair, the envoy for Palestinian development, remained unfinished.
Mr Blair announced in 2007 Israel's agreement to allow the construction of a pipe and pumping station to drain a massive lake of human waste that could drown up to 8,000 Gazans if it burst its banks.
But the project remains out of commission after Israel repeatedly delayed delivery of key components.
"My greatest worry is if the wall of the lake is broken by a rocket or a bomb then eight hundred homes, each with an average of ten residents each, would be flooded in seconds,'' Mr Ali said.
Oxfam said a lack of chlorine to treat water posed another health risk inside Gaza.
It called for an EU delegation due in Israel this week to do everything possible to persuade Israel to allow delivery of crucial supplies such as fuel and chlorine.
Jeremy Hobbs, Oxfam's International Director, said: "The risk to public health increases with shortages of chlorine to treat water and raw sewage spilling into the streets in Beit Hanoun.
"The time for kid-glove diplomacy has long gone. The EU has to put the maximum pressure on all parties to agree an immediate and lasting ceasefire, allow unimpeded humanitarian access and restart the search for a peaceful solution."
It came as Israeli jets attacked a range of targets inside the Gaza Strip for the seventh day running and militants continued to fire rockets across the Gaza perimeter fence.
After killing a senior Hamas leader, Nizar Rayan, in an air strike on Thursday, Israel today continued with the strategy of targeting Hamas leaders, attacking the home of Mohammed Maatuk, a well known activist.
Thousands of Palestinians in the West Bank joined demonstrations after a call from Hamas for a "day of wrath" against the Israeli attacks on Gaza.
The protests were called after an Israeli air strike hit the home of Nizar Rayan, a firebrand leader of Hamas who refused to go into hiding, killing him and several of his wives and children on Thursday.
Senior Hamas figure Fathi Hammad said at the funeral for the 20 people who died in that attack: "We will not rest until we destroy the Zionist entity."
The European Union and United Nations are calling for an immediate ceasefire to deal with what they regard as a humanitarian crisis for Gaza's 1.5 million residents.
But Israel, which is barring foreign journalists from Gaza, refused to accept there was a significant problem for Gaza's civilian population.
Colonel Moshe Levi, commander of the Israeli army's Gaza Coordination and Liaison Administration, said: "Hamas is trying to create the appearance of a humanitarian crisis, but together with the international organisations, we are preventing this from happening."
Israel's position was accepted by Condoleezza Rice, American Secretary of State, yesterday when she said a truce was possible only if Hamas undertook not to fire rockets into Israel.
Hamas has refused to make such an undertaking, instead demanding that a ceasefire would only be possible if Israel stops attacking and ends its blockade on the Gaza Strip.
Miss Rice said: "We are working toward a ceasefire that would not allow a re-establishment of the status quo ante, where Hamas could launch rockets.
"It's obvious that a ceasefire should take place as soon as possible but we want a ceasefire that is durable and sustainable.''