The three Israeli hostages who were mistakenly shot dead by the Israel Defense Forces (IDF) in the Gaza Strip were carrying a stick with a makeshift white flag at the time of the incident, an Israeli military spokesperson said, according to Reuters, Spanish news agency EFE and Israeli media.

The incident happened in an area of intense combat where Hamas militants operate in civilian attire and use deception tactics, he said. The hostages were aged 25 to 28 years.

The soldier who shot at the hostages believed the men were moving toward him as an attempt by the Palestinian Islamist group Hamas to lure IDF soldiers into a trap, the IDF official said.

The official also said that soldiers had found a poster with the letters SOS on a nearby building.

They were all shirtless, and one was carrying a makeshift white flag. The soldier immediately opened fire and shouted "terrorists" to alert the other forces, the Times of Israel reported.

According to Israeli media, the probe concluded that the soldier killed two hostages, while the third was hurt and retreated back into the building, calling for help in Hebrew. At that point, the battalion commander is said to have ordered a cease-fire.

The third hostage later came out and was shot dead by another soldier.

"This was against our rules of engagement," Reuters cited the IDF official as saying. The officer said both soldiers who opened fire, killing the three hostages, did so against protocol.