Hizbullah handed out bundles of cash to people whose homes were wrecked by Israeli bombing, consolidating the Iranian-backed group's support among Lebanon's Shias and embarrassing the Beirut government.
"People already had faith in Hizbullah, this will strengthen their faith," said Ayman Jaber, 27, with a wad of $12,000 in banknotes Hizbullah had given him.
Israeli and US officials have voiced concern that Hizbullah will entrench its popularity by moving fast -- with Iranian money -- to help people whose homes were destroyed or damaged in the 34-day conflict with Israel.
Hizbullah has not said where the funds are coming from to compensate people for an estimated 15,000 destroyed homes.
The scheme appears likely to cost at least $150 million. The Lebanese government has yet to launch anything similar.
Several mass funerals took place in the south for at least 250 people killed during the war, including 30 in Srifa and 29, among them two Hizbollah fighters, in Qana, residents said.
"Thanks to Iran for standing beside the Lebanese," senior Hizbullah official Sheikh Nabil Kaouk told mourners in Qana, using the occasion to attack Washington.
Many Lebanese say the conflict with Israel has enhanced Hizbullah's standing both in Lebanon and beyond.
An Egyptian opinion poll named the group's leader Sayyed Hassan Nasrallah as the most popular figure in the Middle East, ahead of the leader of Hamas and the president of Iran. Lebanon's reconstruction chief said Israeli bombardment had inflicted a "disastrous" $3.6 billion worth of physical damage on Lebanon from which it could take years to recover.
Al-Fadl Shalaq, head of the Council for Development and Reconstruction, said the devastation from the 34-day conflict exceeded that caused by Lebanon's 1975-1990 civil war.
"I have witnessed all the wars in Lebanon but I have never seen a war this fierce and I do not see a response to clearing the rubble of war to match it," he told Reuters in an interview.
Trying to bolster a five-day-old truce, Lebanese troops moved deeper into the south and about 600 deployed in Shebaa village, near the Israeli-occupied Shebaa Farms enclave.