Israel intensified its attacks against Lebanon yesterday, blasting Beirut's airport and army bases in its heaviest air campaign against its neighbour in 24 years.
Four dozen civilians have died so far in the violence following Hezbollah's capture of two Israeli soldiers.
Israeli forces hit hundreds of targets, including Hezbollah weapons stores and transportation infrastructure, as Israel said it had information Hezbollah was trying to move the two Israeli captives to Iran.
Planes punched holes in the runways of Beirut's international airport and two Lebanese military air bases.
Israel's army chief Brig Gen Dan Halutz warned that "nothing is safe" in Lebanon and said Beirut itself - particularly Hezbollah offices and residences - would be a target.
Hezbollah responded by firing new, more advanced rockets into northern Israeli towns, killing one Israeli and wounding 12 others.
The guerrilla force warned that it would rocket the key Israeli port city of Haifa if Israel hit Beirut, a strike that would be the deepest ever into Israel by the guerrillas - some 18 miles.
The shockwaves from the fighting began to be felt as tensions sharpened, with both sides playing a high stakes g ame after Hezbollah snatched two Israeli soldiers: Israel seeking to end once and for all Hezbollah's presence on the border while the guerrillas insisting to trade the captured soldiers with Arab prisoners.
Israel's warning that Hezbollah wanted to take the two soldiers to its ally, Iran, raised the daunting prospect of a further internationalisation of the crisis.
Israeli Foreign Ministry spokesman Mark Regev did not say what the source of the information was.
Trapped between the combatants was Lebanon.
The Israeli warnings of more to come caused panic in Beirut, with traffic in the streets thin as people stuck to their homes and stayed away from their jobs.
Others packed supermarkets to stock up on goods and long lines formed at petrol stations, with many quickly running out of fuel.
Israel said it held Lebanon responsible for Hezbollah's snatching of the soldiers.
The Lebanese government insisted it had no prior knowledge of the move and did not condone it.
Hezbollah fighters operate with almost total autonomy in southern Lebanon, and the government has no control over their actions. But the government has long resisted international pressure to disarm the group. Any attempt to disarm the group by force could lead to sectarian conflict.
Two days of Israeli bomb-ings killed 47 Lebanese and wounded 103, Health Minister Mohammed Jawad Khalife said.
Besides the Israeli civilian, eight Israeli soldiers have also been killed - the highest death toll for the army in four years.
Western countries, Russia and the United Nations called for restraint and demanded the return of the soldiers, as the violence pushed crude oil prices to a new high.
The Arab League called an emergency meeting of foreign ministers in Cairo on Saturday. The Lebanese Cabinet urged the UN Security Council to intervene.
The European Union criticised Israel for using what it called "disproportionate" force in its attacks and EU foreign policy chief Javier Solana said he was planning a peace mission.
President George Bush pledged to work with Israel, criticising Hezbollah for thwarting efforts for peace in the Middle East.
"My attitude is this: there are a group of terrorists who want to stop the advance of peace," he said at a press conference in Germany. "Those of us who are peace living must work together to help the agents of peace."
Palestinian President Mahmoud Abbas warned that Israel's Lebanon offensive "is raising our fears of a new regional war.