IDF video reveals tunnel used to hide Hamas members, hostages in terrorist group's stronghold

Israel’s military has released video and images of a tunnel in a Hamas stronghold that it says was used to hide "high-ranking members" of the terrorist group and hostages. 

The emergence of the labyrinth under Khan Younis in the southern Gaza Strip comes as Israeli Prime Minister Benjamin Netanyahu rejected Hamas' latest offer for a full release of hostages in exchange for a 135-day cease-fire, a complete Israeli military withdrawal from Gaza and the release of Palestinian prisoners. 

"During searches in the tunnel, several rooms were discovered, including a barred cell where hostages were held, a bathroom, and a rest area used by terrorists holding the hostages," the Israel Defense Forces said in a statement. 

One image released by the IDF appears to show a room containing a sink in between cookware and plates used to prepare and serve food. 

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The tunnel, which the IDF says was "used to hide high-ranking members of the Hamas terrorist organization and to hold hostages," was "built under the heart of a civilian area of Khan Younis and intelligence estimates suggest millions of shekels were invested in its construction." 

The IDF added that it "held approximately 12 hostages at different times" and that "three of them have been returned to Israel, and the rest are still being held in Gaza." 

Israeli military forces reportedly battled Hamas inside the tunnel, beaching doors and finding explosives. 

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The three-phase plan rejected by Netanyahu would have seen Israeli hostages released in stages -- women and children first -- in exchange for the Palestinian prisoners being held in Israel, including 500 Hamas would choose from a list of those serving life sentences. 

Male hostages over the age of 19 would have been released after the first 45-day phase is complete and Israeli forces would have to fully withdraw from Gaza at the same time. 

"Surrendering to Hamas’ delusional demands that we heard now not only won’t lead to freeing the captives, it will just invite another massacre," Netanyahu said Wednesday. 

"We will continue until the end," he added. "There is no other solution besides complete victory." 

Fox News’ Timothy H.J. Nerozzi contributed to this report.