Israel is fighting battles on a new front, attacking neighbouring Lebanon after Hezbollah militants ventured into Israel, abducted two Israeli soldiers and slipped back across the border.

Lebanese security officials said Israeli warplanes and gunboats attacked a guerrilla post just 16 kilometres south of Beirut. It was the closest attack to the capital since fighting began earlier in the day with artillery fire and ground troops.

There has been heavy fighting in the area around the Israeli-Lebanon border, with Hezbollah firing rockets and Israel responding. Two Lebanese civilians were killed in Israeli air strikes on a bridge, Lebanese security officials were quoted as saying on Arab TV stations.

The Israeli army confirmed that eight Israeli soldiers were killed during the fighting. Three were killed in the initial raid, while four others were killed when their tank ran over a landmine. The eighth solider died as troops tried to approach the tank.

Hezbollah leader Sheik Hassan Nasrallah said he would only release the two captured Israeli soldiers as part of a prisoner swap with Palestinians jailed in Israel.

"Hezbollah captured two Israeli soldiers near the border with occupied Palestine, and the captives have been moved to a safe area,'' he said in a statement.

Nasrallah called their capture "our natural, only and logical right" to obtain the freedom of prisoners jailed in Israel.

Israel's Defence Ministry confirmed the capture of the Israeli soldiers and said the Lebanese government was responsible for their safety.

Abductions not connected to Hamas

Osama Hamdan, a top Hamas official based in Lebanon, told AP his group did not coordinate with Hezbollah over the abductions. Israeli forces are also attacking Hamas militants in the Gaza Strip to free another captured soldier.

"Now Israel has to decide on its choices," said Hamdan. "It is early to talk about details of the exchange, but no doubt the operation carried out by Hezbollah today will strengthen our demands to exchange the captives."

Israel hasn't forgotten about its Hamas antagonists. Early Thursday, Israeli warplanes destroyed the Palestinian foreign ministry building in Gaza City.

Shiite Muslims, opposed to Israel's occupation of Lebanese territory, created Hezbollah in the 1980s. Israel withdrew from the land in 2000.

Since that time, Hezbollah has become a strong political force, but still has a military branch called the Islamic Resistance, backed by neighbouring Syria.

The militia is active in trying to remove Israel from another disputed area of land - Chebaa Farms. It's part of the Golan Heights, which Israel took from Syria in the 1967 Mideast war.

U.S. Secretary of State Condoleezza Rice said Wednesday that Syria has a "special responsibility" to resolve the crisis, according to AP.

"All sides must act with restraint to resolve this incident peacefully and to protect innocent life and civilian infrastructure," said Rice.

'Act of War'

Israel's military said it planned to call up several thousand reserve troops as Israeli Prime Minister Ehud Olmert called the Lebanese actions an "an act of war."

Earlier, Olmert called an emergency cabinet meeting and said Lebanese guerrillas would pay a "heavy price" for Wednesday's attacks.

"These are difficult days for the state of Israel and its citizens,'' Olmert told reporters.

"There are people ... who are trying to test our resolve,'' he said. "They will fail and they will pay a heavy price for their actions,'' he said.

Residents of Israeli towns along the northern border were ordered to seek cover in underground bomb shelters.

With files from the Associated Press