The Israeli Defence Forces is said to be fighting Hezbollah guerillas in Marjayoun after seizing the southern Lebanese town earlier today.
A woman and a young child were in an Israeli village after Hezbollah fired almost 70 rockets into Israel today.
The IDF said a soldier was killed by an anti-tank missile in fighting in southern Lebanon.
The Israeli army's capture of Marjayoun comes after the Israeli cabinet decided to expand its operations in the area.
However, the Israeli army denied that the action was part of a broader offensive.
Israeli Prime Minister Ehud Olmert has put plans for an expanded offensive in Lebanon on hold to give US-led efforts a chance to form a peacekeeping force.
The Israeli daily newspaper, Maariv, said the decision was made early today just hours after the country's security cabinet voted to allow troops to push further into Lebanon.
There has been no official comment on the report.
Media reports said troops had begun crossing the border under the cover of intense artillery fire.
But the Israeli army said the operation was not an expansion but was aimed at attacking specific rocket launching sites used by Hezbollah militants.
Meanwhile, Israeli television has reported that the bodies of members of Iran's Revolutionary Guard have been found alongside Hezbollah fighters killed in southern Lebanon. Hezbollah has denied the claim.
