Hayya says its former leader died in combat, after US president Joe Biden says his death is a "moment of justice".

The Palestinian militant group Hamas will likely replace Yahya Sinwar with a new political leader based outside Gaza while his brother - Mohammad Sinwar - is expected to assume a bigger role directing the war against Israel in the territory.

"Today evil has suffered a heavy blow, but the task before us is not yet complete," he said. Sinwar, who was named as Hamas' overall leader following the assassination of political chief Ismail Haniyeh in Tehran in July, was believed to have been hiding in the warren of tunnels the terror group built under Gaza over the past two decades.