Reuters has quoted witnesses as saying that Israeli troops had taken control of the town of Marjayoun, 9kms inside south Lebanon today, as well as the nearby villages of Burj al-Molouk and Qlaiah.
But Israeli spokesman Aviv Pazner said the broader offensive approved at a six-hour crisis meeting on Wednesday "has not yet begun."
"The cabinet gave Prime Minister Ehud Olmert and Defence Minister Amir Peretz the authority to decide when to start this operation," Mr Pazner said. "For the time being, it has not begun."
After the cabinet meeting, Israel also announced the conflict would continue for at least another month.
"Plans by Defence Minister Amir Peretz and the chief of staff for expanding the operation have been approved by the cabinet," Deputy Prime Minister Eli Yishai told public radio.
"It is believed that it will last another 30 days," Mr Yishai said. “I fear it could last much longer."
Mr Peretz had already ordered the army to prepare to extend operations in a bid to reduce Hezbollah rocket-launching capabilities, with Israeli troops possibly going beyond the Litani River, 30 kilometres into Lebanon.
Units push 7 kms into Lebanon
Overnight, Israeli units pushed seven kilometres into Lebanese territory reaching the suburbs of Khiam, Lebanese police said.
The advance on Khiam started shortly before midnight after a thousand shells fell on the town Wednesday evening.
Earlier today, Lebanese police said Israeli forces and Hezbollah guerrillas were fighting for control of the Christian town of Marjayun, an important border town in southern Lebanon.
Hezbollah guerrillas were trying to stop the Israeli army advance by firing anti-tank rockets, they said.
The Israeli army has also moved toward the Christian border village of Qlaiah and and Khiam, they said.
Live television footage showed Israeli tanks rolling in a valley between Marjayun and Khiam, a Hezbollah stronghold.
Israel's privately run Channel 10 television earlier said ground troops backed by armoured cars moved into south Lebanon late Wednesday from Metulla, at the northern point of Upper Galilee in Israel's northeastern panhandle.
"Our forces are currently carrying out a limited operation against Hezbollah positions in Khiam from which they fired more than 60 Katyusha rockets against the town of Kiryat Shmona and the panhandle," an Israeli military spokesman said.
"This is not the major offensive authorised today by the security cabinet," he added.
Israel's Maariv newspaper reported that Prime Minister Ehud Olmert later decided to put plans for the wider offensive on hold to give US-led efforts to form a peacekeeping force to curb Hezbollah a chance.
Missile fired into minibus
In other news today, an Israeli drone fired a missile into a minibus driving in the eastern Bekaa Valley, killing one person and wounding 12, residents said.
The attack occurred near the town of Rayak, about five kilometres east of the provincial capital of Zahle.
Another airstrike targeted a road linking the city of Baalbek, traditionally a Hezbollah stronghold, with the Syrian city of Homs.
Israeli warplanes also dropped leaflets over the Palestinian refugee camp of Beddawi, on Lebanon's coast just north of Tripoli, residents said.
Infant killed in Israel
An Israeli infant was killed when a rocket fired from Lebanon by Hezbollah militiamen hit the Arab village of Dir el-Assad in northern Israel, medical sources said.
"Medical teams have established the death of one infant in Dir el-Assad," said a spokesman for the Maged David Adom rescue services, the equivalent to the international Red Cross.
Over 20 Katyusha rocket had been fired into northern Israel by 0830 GMT, police spokesman Micky Rosenfeld told AFP.
MSF to defy ban on vehicles
The medical relief agency Doctors Without Borders (Medecins Sans Frontieres - MSF) says it will defy an Israeli ban on vehicle movements south of the Litani river.
"To forbid all forms of movement, without distinction, will lead to even more civilian deaths and suffering," said Rowan Gillies, MSFs International President.
"We refuse to accept this paralysis of humanitarian assistance and will continue to assist those in need," he added in a statement.
Iranian bodies
Early today, Israeli television said the bodies of Iranian Revolutionary Guards had been found among guerrillas killed in south Lebanon.
There was no independent confirmation.
But in a statement faxed to Reuters, Hezbollah denied that any Iranians were taking part in the fighting alongside its guerrillas.
Hezbollah leader defiant
Reacting to the Israeli push into Lebanon, a defiant Hezbollah chief Sheikh Hassan Nasrallah vowed to turn south Lebanon into a "graveyard" for invading Israeli troops.
"You won't be able to stay in our land, and if you come in, we'll force you out," he said in a televised speech shown on Hezbollah's television station.
"We will turn our precious southern land into a graveyard for the invading Zionists."
Nasrallah said four weeks of Israeli bombardment had not weakened the guerrilla group's rocket capabilities and called on the Arab residents of Haifa to quit the Israeli city to avoid being hurt by Hezbollah missile barrages.
Despite its military superiority, Israel's US-backed armed forces have found it much harder than expected to crush Hezbollah, which has continued its fierce resistance.
Al-Jazeera television said 11 Israeli soldiers had been killed in heavy clashes in the Lebanese border villages of Aita ash-Shaab, Taibeh and Debel.
The sources said at least three Hezbollah fighters had been killed in the clashes.
A spokesman for the Israeli military later confirmed that fifteen Israeli soldiers were killed in clashes with Hezbollah in south Lebanon yesterday, the military's biggest single day losses of the month-old conflict.
Another 38 soldiers were wounded in the fierce fighting.
In northern Israel, residents of Kiryat Shmona were piling on to buses in the first evacuation of an entire town since the creation of Israeli in 1948, as a barrage of almost 100 rockets landed from across the border.
No casualties have been reported so far.