Israel's offensive has primarily been an aerial campaign, but one Israeli official, speaking on condition of anonymity, said ground troops had entered Lebanon overnight to attack a Hezbollah position but then returned to Israel, the Associated Press reported.
France, the United States, Britain and other nations scrambled to evacuate their citizens from Lebanon.
The fighting, the worst since Israel invaded Lebanon in 1982, was triggered when Hezbollah abducted two Israeli soldiers in a raid in northern Israel last week.
U.N. Secretary-General Kofi Annan said Security Council members would start drafting a plan to deploy a multinational security force to southern Lebanon, but Israel said it was too soon to start talking about such a force.
"We're at the stage where we want to be sure that Hezbollah is not deployed at our northern border," said Israeli government spokeswoman Miri Eisin, according to Reuters.
Hezbollah, which is backed by Syria and Iran and holds some seats in Lebanon's government, is seeking the release of Lebanese and Palestinian prisoners held by Israel.
Israel wants the disarmament of Hezbollah in accordance with U.N. Security Council resolutions. The Lebanese government is concerned confronting Hezbollah directly would re-ignite civil war and split its army.
Iran's Foreign Minister Manouchehr Mottaki said Monday after talks with Syria's Vice President Farouk al-Sharaa that a prisoner swap would be "acceptable and fair."
"In fact, there can be a cease-fire followed by a prisoner swap," he said, according to the AP.
Israel's campaign has killed more than 179 people, mostly civilians, wounded at least 500 people, and destroyed much of Lebanon's civilian infrastructure, Reuters reported.
Twenty-four Israelis have been killed in the fighting, including 12 civilians hit by rocket attacks.
The Group of Eight nations of the United States, Russia, Japan, Germany, Britain, France, Italy and Canada, attending a summit in Russia, along with the European Union, have urged all sides to rein in the violence.