The pumps, which take water from the Mediterranean Sea, were said to be located about one mile north of the Al-Shati refugee camp, in northern Gaza.
Israel had not disclosed when it intends to unleash the deluge on the complex, but footage has emerged showing water filling tunnels on Tuesday though it has not been independently verified.
Officials in the US, which is Israel’s staunchest ally, were reported to have privately expressed concern about the plan.
The IDF declined to comment but said it was dismantling the network in “various ways”, the Wall Street Journal reported.
Hamas has spent more than 15 years building a network of underground tunnels beneath the strip, known as the “Gaza Metro” since it was elected to power in the enclave in 2006.
Israel’s foreign ministry claims that at least 1,370 tunnels have been built since 2007. They are often between 10 and 20 metres beneath the ground and up to two metres in height.
Some are believed to be equipped with running water, electricity and even bedrooms, and many tunnel shafts emerge in civilian buildings such as hospitals, mosques and schools, the IDF claimed.
They have been used to devastating effect by Hamas during the war so far, with terrorists launching surprise hit-and-run attacks on Israeli soldiers from their underground hideouts.
“The tunnels are a massive challenge,” one official told the FT. “Hamas has also placed things inside – booby traps, obstacles to our movement inside the tunnels – that increase the risk to our forces.”
The group believes that with Israel’s overwhelming aerial and armoured military superiority, tunnels are a way to cut some of those advantages by forcing Israel’s soldiers to move underground.
Hamas is also believed to have taken Israeli hostages into the tunnel system. Freed Israeli captive Yocheved Lifshitz, 85, described them as a “spider web” with large hall-like rooms inside.
Mrs Lifshitz said she met Hamas leader Yahya Sinwar, who is believed to be hiding underground, while in captivity and asked him how he was not ashamed for having acted violently against peace activists like herself.
“Sinwar was with us three to four days after we arrived,” Mrs Lifshitz told the Hebrew-language Davar newspaper. “I asked him how he is not ashamed to do such a thing to people who all these years have supported peace.”