Hizbullah's chief has pledged open war on Israel after it bombed his home, saying "look at it burn" when an Israeli warship that had earlier rocketed Lebanon was attacked and set ablaze.
"You wanted open war. We are going to (wage) open war," Sayyed Hassan Nasrallah said in a telephone message broadcast live on Hizbullah television after his house was hit as Israel ramped up the assault it launched after Hizbullah fighters seized two Israeli soldiers and killed eight.
Israeli media said an unmanned airborne drone packed with explosives had hit the naval vessel, which was 16 km (10 miles) off the Lebanese coast. Al Jazeera television said four Israeli troops were missing. Army Radio said 80 crew were on board. The Israeli army said the missile ship was still burning and was being towed back to Israel.
A Lebanese security source said the warship, which had bombed Lebanon earlier in the day, suffered considerable damage. "Look at it burn," Nasrallah declared in his address. "It will sink and along with it dozens of Zionist soldiers." Celebratory gunfire erupted in the Lebanese capital and drivers honked their horns after Nasrallah's speech.
The Syrian- and Iranian-backed Islamist group, which wants to trade its captives for prisoners held in Israel, fired more rockets across the frontier, killing an Israeli woman and child. Israeli air strikes destroyed Nasrallah's apartment building and a main Hizbullah office in southern Beirut. Hizbollah said Nasrallah and his family and bodyguards were safe.
An Israeli army spokeswoman would not say if the intention had been to kill Nasrallah. "We targeted by air the headquarters of Hizbullah in southern Beirut. We attacked two structures that are used by the leadership of Hizbullah," she said.
Israel also attacked many Lebanese civilian installations on the third day of its campaign to force the release of the two Israeli soldiers and halt cross-border rocket strikes. The assault has drawn mounting international criticism but the White House said President George W. Bush would not press Israel to halt its military operation.
Asked whether Mr Bush had agreed to a request from Lebanese Prime Minister Fouad Siniora that he rein in the Israelis, White House spokesman Tony Snow said: "No. The president is not going to make military decisions for Israel."
The Lebanon violence is the fiercest since 1996 when Israel launched a 17-day blitz on Hizbullah strongholds in the south, four years before its troops pulled out of Lebanon.
Israeli aircraft rocketed runways at Beirut's already closed international airport and bombed a flyover just to the south. Israeli warplanes blasted the main Beirut-Damascus highway overnight, tightening an air, sea and land blockade of Lebanon, and bombed targets in Beirut's Shia Muslim suburbs, killing three people and wounding 40, security sources said.
Air strikes in south Lebanon killed five more people.
Their deaths brought to 66 the number of people, almost all civilians, killed in Lebanon in the past three days. Hizbullah rocket attacks on northern Israel have now killed four Israelis and wounded more than 150.
Israeli Prime Minister Ehud Olmert's office said such salvos "cannot and will not be allowed to continue".