In other developments, Hezbollah has fired more than 100 rockets at Israel, wounding some civilians, as the Israeli government began evacuating more than 15,000 people living under the rocket attacks in the north of the country.
Cabinet secretary Yisrael Maimon, who avoided using the word "evacuation", said "we have decided to allow residents from the north to take several days of vacation across Israel."
The plan, under which over 15,000 people will be sent to hotels at government expense for several days, was aimed at "refreshing the residents sitting in shelters," Mr Maimon told army radio.
Israel to press on
Israeli Defence Minister Amir Peretz said Tuesday Israel will press ahead with its war on Hezbollah and is poised to occupy more areas of south Lebanon from which rockets are fired.
Israel's Security Cabinet is to meet tomorrow to give final approval to a deeper push into Lebanon, to the Litani River some 30 kilometres north of the Israel-Lebanon border.
Mr Peretz said he had asked the army to prepare for the next stage of the ground offensive.
The Israeli military later dropped flyers on south Lebanon warning it would strike any vehicle travelling south of the Litani river, an area that includes the port of Tyre.
Attacks on Tuesday
In the most recent attacks, anti-tank missiles fired by Hezbollah gunmen have killed an Israeli soldier and wounded five other troops in the village of Dabel in southern Lebanon, an army spokesman said.
The clash took place near the town of Bint Jbeil, the scene of fierce fighting in which three soldiers were killed yesterday.
Describing the latest incident, the spokesman said anti-tank missiles struck army engineering vehicles and infantry troops.
He said soldiers had killed 15 Hezbollah fighters in the area over the past several days.
AFP said the death of the Israeli brought to 62 the number of Israeli troops killed since the capture of two soldiers in a deadly Hezbollah raid on July 12 that triggered the offensive on Lebanon.
Earlier, the army said its forces were locked in fighting with Hezbollah in several sites in southern Lebanon, where a number of soldiers were wounded.
Earlier attacks
Twenty people were killed in an Israeli strike on a suburb of southern Beirut.
The bombardments targeted the Shiyah district, a Hezbollah hub, which until now had been spared attacks and was still inhabited by some residents.
Rescuers dug through the rubble with a bulldozer and with their hands as fire engines doused burning ruins and the charred shells of cars.
AFP said the double air strike caused a three-storey building to collapse while a neighbouring building was sliced in two.
Lebanon's civil defence service later said that rescue workers were still searching for 26 people missing after the air strikes.
In addition, Israeli air raids killed at least 40 people in southern Lebanon and the eastern Bekaa Valley.
The Israeli army told residents of south Lebanon that any vehicles seen moving after 10pm could be targeted.
"Anyone who does travel is taking a high risk. There is no end period," an army source said. "This will allow us to track anyone potentially trying to launch rockets."
Israeli Brigadier-General Yossi Kuperwasser said Israel had inflicted serious damage on Hezbollah but the group still possessed thousands of short-range rockets and hundreds of longer-range weapons.
"Crushing Hezbollah is not like ordering pizza. It takes time," he told a news conference.
14 killed near Sidon
A wave of attacks severed the last coastal crossing on the Litani River between Sidon and Tyre, cutting the main artery for aid supplies to civilians in the south, according to aid agencies.
In the deadliest attack in the area, 14 civilians, including women and children, died in Ghaziye near the city of Sidon, when three buildings and a villa were hit by an Israeli air strike.
At least five civilians were killed in Tyre in two successive early afternoon raids on three buildings.
The housing complex hit was the same as that targeted by a commando operation at the weekend that the Israeli military said left three Hezbollah militants dead.
Top Israeli military commanders have sought permission to expand the ground offensive, with up to 20,000 troops in Lebanon to try to create a buffer zone several kilometres across the border.
The Israeli army said three soldiers were killed in fighting with Hezbollah around the border town of Bint Jbeil - the scene of the fiercest ground combat of the conflict.
Another 36 civilians have been killed in a barrage of Hezbollah rocket fire from across the border since the offensive began on July 12.
According to official tolls, more than 1,000 Lebanese have been killed and around 3,500 wounded in the offensive.
Aid boost considered
Meanwhile the Australian government will consider boosting the $5 million in humanitarian aid it has given to war-torn Lebanon.
Prime Minister John Howard has told parliament Australia had committed $5 million to the humanitarian crisis resulting from a massive displacement of Lebanese people from the south, and he will consider adding to that figure.
Foreign Minister Alexander Downer said around 100 Australians were believed to still be in southern Lebanon who wanted to escape the war zone.
So far, DFAT has evacuated 5,200 Australians, with 4,600 having returned to Australia, however, Mr Downer said there was still some capacity for evacuation.
"We're continuing to do everything we can to evacuate that group of people, working with the United Nations, the Red Cross, and also privately organised convoys and other partner governments,” Mr Downer said.
"But the security environment in southern Lebanon rather obviously remains very dangerous, it remains volatile and any further evacuations are extremely difficult."