In the latest attacks, Lebanese security officials said Israeli warplanes destroyed a deserted four-storey building near the southern market town of Nabatiyeh but caused no casualties.
The officials said the raid apparently targeted a flat belonging to a man who was not at home. It was not immediately known whether the man was a Hezbollah activist.
As Israeli warplanes went into action across Lebanon and fighting continued around a key border town, Israel said it would limit its ground offensives after the killing of nine of its troops whilst fighting Hezbollah guerrillas.
"Yesterday in Rome we in effect obtained the authorisation to continue our operations until Hezbollah is no longer present in southern Lebanon," Israeli Justice Minister Haim Ramon told army radio, referring to a 15-nation conference in the Italian capital on Wednesday.
At least 10 people were killed as combat jets bombarded Hezbollah strongholds in south Lebanon and the eastern Bekaa Valley, bringing the death toll to 417 people in Lebanon alone as the conflict entered its 16th day.
World powers remain at odds over how to end the conflict, despite the mounting death toll and warnings that Lebanon was facing a humanitarian catastrophe.
The United States, Israel's closest ally, infuriated Arab opinion by blocking calls at the Rome meeting for an immediate ceasefire and instead calling for efforts to reach a "sustainable" truce.
US President George W. Bush said he was "troubled" by the destruction Israeli strikes have left in Lebanon but rejected any "fake peace" that does not tackle the conflict's root causes.
Egyptian Foreign Minister Ahmed Abul Gheit said Arab countries were disappointed that the Rome conference had "failed to meet Arab demands" for an immediate truce.
World powers divided
Washington also prevented adoption of a UN Security Council draft resolution critical of Israel after its warplanes killed four UN observers in a raid in southern Lebanon that UN chief Kofi Annan said was "apparently deliberate".
The 15-nation Council passed a statement expressing shock at the attack, but not condemnation.
China blasted the Council's failure to agree a statement condemning the killings.
And a rift opened with Britain, hitherto a steadfast US ally, after it emerged that Washington had used a Scottish airport as a staging post for new arms deliveries to Israel to sustain its bombing campaign.
"I am not happy about it," Foreign Secretary Margaret Beckett said of the stopover by US aircraft delivering GBU28 laser-guided bombs to Israel.
US Secretary of State Condoleezza Rice meanwhile insisted there had been agreement in Rome on the need for a multinational UN-mandated force for Lebanon and said the world body planned to hold a meeting this week or next.
European Union foreign policy chief Javier Solana said the bloc would be willing to contribute peacekeeping forces to Lebanon.
A diplomatic source in Paris said France was to propose a resolution that would see the creation of a buffer zone on both sides of the border.
Air strikes to intensify
Israel is already planning a buffer zone in Lebanon to protect its border, while insisting there was no question of another occupation, with memories still raw of the quagmire that resulted from its 1982 invasion.
Mr Ramon said Israel no longer regarded the border town of Bint Jbeil, a Hezbollah military stronghold where the nine soldiers were killed, as a civilian area after ordering people to leave.
"Everyone who is still in south Lebanon is linked to Hezbollah, we have called on all who are there to leave," the Israeli justice minister said.
At an emergency meeting on Thursday, Israel’s security cabinet decided to intensify air strikes on Lebanon and restrict its more risky ground operations to setting up a border buffer zone of a few kilometres, army radio reported. It also decided to call more reservists.
Israel insists it will not halt its assault until two soldiers captured by Hezbollah on July 12 are freed and the militia is disarmed, but it has met unexpected resistance from the Shiite fundamentalist group.
Hezbollah launched another 40 rockets into northern Israel on Thursday, damaging buildings but causing no casualties, the army said. Fifty-one Israelis have been killed, the majority of them soldiers.
At least 10 people were killed in Lebanon in the latest wave of Israeli attacks, police said.
Aid trickles through
In a sign of some relief for Lebanese trapped by the air and sea blockade Israel imposed at the start of the conflict, a Jordanian plane carrying UN humanitarian aid landed at Beirut airport.
And the UN Children's Fund UNICEF announced that a first convoy of humanitarian aid for children had arrived in Tyre, the scene of heavy Israeli bombardment.
Aust pledges further $3m
The federal government has pledged $2 million to a United Nations' crisis appeal to help Lebanese civilians caught up in the conflict in the Middle East.
The government's aid arm, AusAID, would contribute the $2 million to the UN World Food Program, Foreign Minister Alexander Downer said today.
A further $500,000 will be given to the UN Office for the Coordination of Humanitarian Affairs to help manage the relief effort on the ground, while the World Health Organisation will receive $500,000 for medical aid.
Today's pledge brings Australia's contribution to relief efforts in Lebanon to $5.5 million.
Much of southern Lebanon's infrastructure lies in ruins from Israeli bombing and food, fuel and medical supplies have been disrupted with some 800,000 Lebanese displaced. The UN food body has warned of a "major food crisis".
In the Gaza Strip, where Israel is engaged in another assault to retrieve a third captured serviceman, three people were killed by Israeli shells, medics said.
A total of 143 Palestinians and an Israeli soldier killed by friendly fire have now died since Israel launched its offensive after the soldier's seizure on June 25.
Palestinian president Mahmoud Abbas said in Rome efforts were underway "which lead us to believe that he (the soldier) will be released soon."
But two of the armed groups holding the soldier denied Mr Abbas's comments.
"There is nothing new concerning this file. The issue is still in the hands of the three armed groups and not in the hands of any political leader," a Hamas spokesman said.
Olmert phones Howard
Prime Minister John Howard says Israeli Prime Minister Ehud Olmert has promised to do all he can to protect Australians in southern Lebanon.
During a 20-minute phone call last night, Mr Howard said he asked Mr Olmert for help in protecting the Australians.
"He rang me to talk about the situation, to express gratitude for the diplomatic support we have displayed for Israel," Mr Howard told Southern Cross Broadcasting.
Mr Howard said he believed the Israelis would agree to a ceasefire provided it were on a proper basis, with an international stabilisation force a key element.