Israel said today that it would widen its ground offensive in Lebanon if diplomatic negotiations at the United Nations failed to achieve a ceasefire.
At the same time, the Lebanese army called up reserve soldiers in a move apparently linked to a possible deployment of about 15,000 troops on the border with Israel to end more than four weeks of fighting between Hezbollah guerrillas and Israeli forces.
Amir Peretz, the Israeli Defence Minister, announced that he had given orders to the army to step up its ground and air offensive to prevent a repeat of yesterday's high Israeli death toll.
The Lebanese Prime Minister, Fouad Siniora, has proposed that Lebanese troops should be deployed in the south quickly, with the backing of a strengthened United Nations force, so that the Israeli military can withdraw as part of any ceasefire deal. Lebanon is pressing for the United States to accept the arrangement and work it into a draft UN resolution on a ceasefire.
Earlier today Mr Saniora withdrew a tearful claim made at a meeting of Arab League ministers that an Israeli air strike had just killed 40 civilians in the border village of Houla.
"One hour ago there was a horrible massacre in the village of Houla, a deliberate massacre, in which there were more than 40 martyrs," Mr Siniora said at the emergency meeting of Egyptian, Syrian and Jordanian foreign ministers in Beirut.
Mr Siniora called for help to seek "an immediate and unconditional ceasefire" and wiped away tears as pleaded for his country not to become an "arena for conflicts and confrontations whatever the justification".
Later however Mr Siniora retracted his allegation, saying that at least one person had died in Houla.
Witnesses told local TV stations that an air strike had flattened five multi-storey homes in a tribal compound. Security sources at the scene later said that voices could be heard crying for help from under the rubble, and reported that 50 people had been found alive.
United Nations peacekeepers at a post near Houla reported that Hezbollah had fired rockets towards Israeli twice today, from positions near the UN base. There was also fighting between Israeli ground troops and Hezbollah fighters near the village, with Hezbollah claiming to have killed four Israeli soldiers there.
The Israeli army said that it was checking the claims about the Houla air strike, but repeated that residents in villages in southern Lebanon had been warned to leave.
Fighting between Israel and Hezbollah intensified this morning while diplomatic efforts at the United Nations to agree a ceasefire remained stalled.
Mr Peretz said that he had given the order to army leaders today to widen his country's ground and air attacks.
"I gave an order that, if within the coming days the diplomatic process does not reach a (successful) conclusion, Israeli forces will carry out the operations necessary to take control of Katyusha rocket launching sites in every location," Mr Peretz said after he and Ehud Olmert, the Israeli Prime Minister, visited an army headquarters near the Lebanese border.
This morning Israeli warplanes bombed the south and east of Lebanon, and yet again struck the rubble-strewn southern suburbs of the Lebanese capital where the Shia-led political-military movement has its headquarters.
Lebanese authorities said that, separately from the air strike at Houla, at least 28 people had died today. Among the reported victims were seven people killed when a missile hit a house in Qassmieh, near the port of Tyre. At least six bodies were pulled out of the rubble of a building in Qassaniyeh. A woman and her daughter were killed at an army checkpoint near the village of Harouf, and four people died when a bomb hit a house in Kfar Tebnit.
Since the conflict started three weeks ago, 925 Lebanese have been killed by Israeli air strikes and a further 75 are missing, the Lebanese Government said, before today's claims about Houla.
Hundreds of Hezbollah guerrilla fighters meanwhile engaged 10,000 conventional Israeli ground troops in the war zone in the mountainous region between the Lebanese-Israeli border and the Litani river, 13 miles to the north.
A force of 30 Israeli commandos was locked in combat with Hezbollah after being landed by helicopter on hilltop overlooking Ras al-Biyada, south of Tyre.
There were reports on Al-Arabiya, an Arab satellite news channel, that three Israeli soldiers had been killed in the strategic town of Bint Jbeil, a Hezbollah stronghold that has been the scene of much of the fiercest ground fighting since the Shia militant group started the conflict with a military raid into Israel on July 12. The Israeli army said that one soldier had died.
An Israeli air strike hit the last crossing over the Litani this morning, cutting off the main artery for aid to the southern port of Tyre and the war zone near the Israeli border, according to the humanitarian group Medecins Sans Frontieres.
Five Israelis were reported injured as more than 80 rockets struck northern Israeli towns, fired by mobile Hezbollah missile launchers.
Yesterday was Israel's deadliest day, when Hezbollah's Iranian-made rockets killed 12 infantry reservists in a vehicle parked on a hilltop two miles south of the border, and three civilians were killed and 160 injured in the Israeli port of Haifa. Israel's confirmed death toll so far in three weeks of asymmetric conflict is 58 soldiers and 36 civilians.
Talks were due to resume at the UN later today on a peace proposal drafted jointly by France and America. The original draft called for a full cessation of hostilities, telling Hezbollah to end attacks immediately and saying Israel should stop all offensive military operations - although Israel is permitted to defend itself.
Last night it was reported that progress had stalled, with no agreement on the terms for ceasing fire. Hezbollah ministers in the Lebanese Government say that their party's fighters will not stop firing until every Israeli soldier has left Lebanese soil.
Israel meanwhile wants to keep its soldiers in southern Lebanon until an international peace-keeping force arrives to take over responsibility for ensuring that Hezbollah is not rearmed.
This afternoon President Bush appeared to react positively to parts of the Lebanese proposal to use its army to patrol the south of Lebanon, saying that the point of the UN resolution was to strengthen Mr Siniora's Government so that the Lebanese security forces could take control of the whole of the country. He acknowledged that Hezbollah's political wing was part of the Lebanese democracy, with elected ministers, but he condemned its military wing, which controls southern Lebanon, as a "state within a state" that he blamed squarely for starting the conflict.
"Hezbollah is an armed movement that provoked the crisis. Whatever comes out of the resolution must address that root cause," said Mr Bush, in a press conference at his ranch in Crawford, Texas. "The concern from the parties in the region is whether or not the resolution will create a vacuum in which Hezbollah and its sponsors will be able to create more instability."
Mr Bush and Condoleezza Rice, the US Secretary of State, appeared relaxed about the disagreements between the two sides on how to end the conflict, saying that they were only to be expected. Ms Rice claimed that the areas of agreement were much larger than most people realised.
France suggested that it would be presenting a revised draft resolution later today.
A number of foreign ministers from around the world, including a delegation from the Arab League, are to travel to New York for talks with Ms Rice at the UN tomorrow, it was announced this afternoon.
