Striking mobile telephone and television masts, Israel also kept up its devastating air blitz on Lebanon that has killed at least 350 people and displaced over 500,000 in 11 days of military action on the country.
Britain's junior foreign minister openly criticised the Israeli military offensive as "difficult to understand".
US Secretary of State Condoleezza Rice was scheduled to visit the region after once again rejecting the idea of a ceasefire.
"The whole thing has to stop. It's no natural disaster but a man-made crisis. This is a senseless war. It should never have started. It should never have been carried out like it is now," UN relief coordinator Jan Egeland said in Cyprus before heading to Lebanon.
General Beni Gantz said Israeli air and ground forces "have more or less completed taking over the village Marun Al-Ras," close to the Israeli border and strategically located 911 meters above sea level.
Gantz said Hezbollah forces sustained "many casualties after fierce fighting that lasted a long time."
But Lebanese security forces said that Israeli and Hezbollah forces were engaged in street battles in the village, where four Israeli soldiers and several Hezbollah militiamen were killed in battles in recent days.
Earlier, around 10 armoured Israeli personnel carriers and bulldozers moved across the border at Avivim, around 35 kilometres from the coast, by-passing an observation post of the UN Interim Force in Lebanon.
The army said the incursion was a "pinpoint operation" and insisted it has no plans for a full-scale invasion, despite consistently refusing to rule the option out.
Israel urged all residents to leave south Lebanon to leave and also called up thousands of reservists as it massed troops along its northern border.
"To residents of villages south of the Litani River, you are requested to abandon your homes immediately," read flyers fluttering down from the skies of south Lebanon.
Meanwhile, one employee of the LBCI television station was killed and another wounded in an Israeli air strike on TV transmission towers and mobile telephone masts at Fatqa, in the Kesrwan mountains north-east of Beirut.
Transmission towers for Hezbollah's Al-Manar and the privately run New TV, as well as mobile phone networks, were also destroyed in Terbol in northern Lebanon.
Mobile telephone networks were down in the north of Lebanon after the
strikes while local television transmission for LBCI was cut in the north and in Kesrwan mountains, although people could still view channel on satellite.
"The Israelis are looking to destroy sound and image in Lebanon - the last weapons this country has - after bombarding infrastructure," said Minister for Telecommunications Marwan Hamadeh.
Five civilians were killed and scores were wounded on Saturday in Israeli raids on various locations in Lebanon.
Thirty-three Israelis have also been killed in the worst cross-border fighting in a quarter century.
Three civilians were wounded early on Sunday in an Israeli strike on a
building housing a Hezbollah religious centre in the centre of Sidon, the first attack in the heart of the southern city since the start of the offensive.
As tit-for-tat strikes continued, Hezbollah militants kept up a defiant stream of rockets onto northern Israel.
Police said 80 Katyusha rockets landed on Saturday, injuring 16 people.
Britain's junior foreign office minister Kim Howells made London's most unequivocal criticism yet of Israel's military offensive, in stark contrast to the line taken by Washington and his own prime minister.
"These are not surgical strikes. It's very difficult to understand the kind of military tactics that are being used," Howells told journalists during a visit to Beirut.
"If they are chasing Hezbollah, then go for Hezbollah. You don't go for the entire Lebanese nation."
"I very much hope that the Americans understand what's happening to Lebanon - the destruction of the infrastructure, the death of so many children and so many people," he said.
Jan Egeland, who is due to arrive in Beirut from Cyprus on Sunday, said he would be "urging and begging" for some $US100 million dollars ($A134 million) in aid to help a nation already in the throes of a humanitarian crisis.
Israel said it opened a safe corridor to the Beirut port for ships and aircraft.
But Israel's air and sea blockade has put Lebanon's only international airport out of action, and the bombing of houses, roads, bridges, factories, warehouses and trucks has created scenes reminiscent of the 1975-1990 civil war.
US President George W Bush maintained his backing for Israel's campaign against Hezbollah as Rice prepared travel to the region on Sunday in search of what she described as a long-term solution.
"I believe sovereign nations have the right to defend their people from terrorist attack, and to take the necessary action to prevent those attacks," Bush said in his weekly radio address.
"Secretary Rice will make it clear that resolving the crisis demands confronting the terrorist group that launched the attacks and the nations that support it," Bush said.
Underlining the repercussions of the Lebanon conflict on the whole region, he said Syria was "a primary sponsor" of Hezbollah and has given the Shiite militia Iranian-made weapons.