The man in charge of Israeli ground forces, Major-General Benny Gantz, said on Saturday that after fierce fighting, his soldiers had ousted Hezbollah fighters from the village of Maroun al-Ras.
He said six Israeli commandos were killed in the fighting and that Hezbollah had suffered dozens of casualties in and around the large village.
Referring to a suspected Hezbollah stronghold nearby, Gantz said: "In summary, it can be said that the area of Maroun al-Ras, that had served as a [Hezbollah] vantage point over Avivim, now serves as an [Israeli] vantage point over Bint Jbail."
A senior Lebanese army commander has denied the claims saying that three Israeli tanks were "completed destroyed" after attempting the enter the village, an Aljazeera correspondent in south Lebanon reported.
Up to 2,000 troops entered southern Lebanon on Saturday, but some have since returned to Israel. No Israeli or Hezbollah casualties were immediately reported.
An Israeli army spokesman said his country's forces were making only limited incursions a few kilometres into south Lebanon.
He said: "It will probably widen, but we are still looking at limited operations.
"We're not talking about massive forces going inside at this point."
Hezbollah says its fighters destroyed three Israeli tanks and injured their crew near Maroun al-Ras but the claims have yet to be confirmed.
Television and mobile phone
facilities have been hit
Hezbollah also fired at least 150 rockets into northern Israel on Saturday, hitting Carmiel, Kiriyat Shemona, Nahariya and smaller communities such as Bet Hilel, Mayan Baruch and Mashov Am. Five Israelis were wounded.
Elsewhere Israel continued its offensive by hitting communications targets in Lebanon.
Fresh air strikes on Sunday hit factories in Al-Manara and Teanayel in eastern Lebanon and Hezbollah's Beirut headquarters. One civilian was killed in the attacks, Aljazeera reported.
Three air raids on Saturday hit a relay station used by several Lebanese television stations and an Alfa mobile telephone network mast in Christian areas north of Beirut.
Foreigners continue to leave
The UN estimated on Sunday that over 500,000 Lebanese have left their homes since fighting began 11 days ago.
Thousands of Lebanese civilians have fled north fearing Israel will invade and expand its 11-day-old bombardment which has already killed up to 362 people, the majority civilians.
Aljazeera learned that about 35,000 refugees had arrived in the city of Sidon alone.
Foreigners continue to flee the country. Ships and aircraft worked through the night, taking more people from Lebanon to Cyprus and Turkey.