UN officials in south Lebanon and Lebanese security sources said that the four UN observers were killed in an Israeli bombing raid on Tuesday.
"One aerial bomb directly impacted the building and shelter in the base of the United Nations Observer Group in Lebanon in the area of Khiam," said Milos Strugar, a United Nations Interim Force (UNIFIL) spokesman.
"There are casualties among the observers. A UNIFIL dispatched rescue team which is on the spot is still unable to clear the rubble," he said.
"There were 14 other incidents of firing close to this position in the afternoon from the Israeli side and the firing continued during the rescue operation," he added.
A Chinese national was among the four observers killed, China's official Xinhua news agency reported. It said the other three were from Finland, Austria and Canada.
In Jerusalem, an Israeli army spokeswoman said the military was investigating the report.
"There are casualties among the observers. A UNIFIL dispatched rescue team which is on the spot is still unable to clear the rubble"
In Rome, Kofi Annan, the UN secretary-general, said he was shocked at Israel's "apparently deliberate targeting" of a UN post in Lebanon.
He also asked Israel to investigate the incident.
An Israeli tank shell had hit a UNIFIL position in southern Lebanon on Monday, wounding four Ghanaian soldiers. Shrapnel from tank shells fired from the Israeli side seriously wounded an Indian soldier last week and Hezbollah fire wounded an Italian observer on the border on Sunday.
In 1996, during Israel's Grapes of Wrath campaign in Lebanon, an Israeli jet bombed a UNIFIL compound in the southern village of Qana, killing 106 civilians sheltering inside.
UNIFIL was created in 1978 after Israel's first major invasion of southern Lebanon and has been there ever since. The United Nations has called for a bigger, better armed, more robust international force in the area.