"It is vital to reach immediately a ceasefire in Gaza," to avoid the death and destruction that a military operation against Gaza City would cause, Guterres said in Japan where he is attending a conference on African development.
He also called on Israel to reverse a decision to expand "illegal" settlement construction in the West Bank.
Israel has called up tens of thousands of reservists while the government considered a new ceasefire proposal to pause nearly two years of war.
"We have begun the preliminary operations and the first stages of the attack on Gaza City, and already now IDF forces are holding the outskirts of Gaza City," Brigadier General Effie Defrin, Israel's military spokesman, told reporters.
A military official briefing reporters earlier on Wednesday said reserve soldiers would not report for duty until September, an interval that gives mediators some time to bridge gaps between Hamas and Israel over truce terms.
But after Israeli troops clashed with Hamas fighters in the Gaza Strip on Wednesday, Prime Minister Benjamin Netanyahu's office said the Israeli leader sped up the timeline for taking control of Hamas strongholds and defeating the militant group that triggered the conflict with an attack on Israel in October 2023.
The Israeli statements signalled Israel was pressing ahead with its plan to seize the Gaza' Strip's biggest urban centre despite international criticism of an operation likely to force the displacement of many more Palestinians.
Defrin said troops were already operating on the outskirts of Gaza City, and Hamas was now a "battered and bruised" guerrilla force.
"We will deepen the attack on Hamas in Gaza City, a stronghold of governmental and military terror for the terrorist organisation," the spokesman said.
Israel currently holds about 75 per cent of the Gaza Strip.
Many of Israel's closest allies have urged the government to reconsider but Netanyahu is under pressure from some ultranationalist members of his coalition to reject a temporary ceasefire, continue the war and pursue the annexation of the territory.
Finance Minister Bezalel Smotrich announced final approval on Wednesday of a widely condemned Israeli plan for a settlement project in the occupied West Bank that he said would erase any prospect of a Palestinian state.
The war in the Gaza Strip began on October 7, 2023, when gunmen led by Hamas attacked southern Israeli communities near the border, killing about 1200 people, mainly civilians, and taking 251 hostages including children into the enclave, according to Israeli figures.
More than 62,000 Palestinians have been killed in Israel's air and ground war in the Gaza Strip since then, according to Gazan health officials, who do not say how many were militants but have said most of those killed have been women and children.
Hamas has accepted a proposal put forward by Arab mediators for a 60-day ceasefire that would involve releasing some of the remaining hostages and freeing Palestinian prisoners in Israel.
The Israeli government, which has said all the 50 remaining hostages must be released at once, is studying the proposal.
Israeli authorities believe that 20 hostages are still alive.
Many Gazans and foreign leaders fear a storming of Gaza City would cause significant casualties.
Israel says it will help civilians leave battle zones before any assault begins.
Israeli troops clashed on Wednesday with more than 15 Hamas militants who emerged from tunnel shafts and attacked with gunfire and anti-tank missiles near Khan Younis, south of Gaza City, severely wounding one soldier and lightly wounding two others, an Israeli military official said.
In a statement, Hamas' al-Qassam Brigades confirmed carrying out a raid on Israeli troops southeast of Khan Younis and engaging Israeli troops at point-blank range.
It said one fighter blew himself up among the soldiers, causing casualties, during an attack that lasted several hours.
