Around 5,000 mourners thronged the funeral procession in the village of Qana, where the 27 victims of an Israeli strike, more than half of them children, were buried.

In the nearby village of Sreifa, 30 people were buried, among at least 250 dead from 40 southern villages and towns finally laid to rest five days into a truce.

At least 1,181 people in Lebanon and 157 Israelis were killed in the conflict.

More than 160 people had been temporarily buried in the nearby port city of Tyre but were exhumed on Friday for formal burials in their villages.

Others had been kept in the morgue until the fighting stopped and a sending off as martyrs could be arranged.

Cash handouts

Hezbollah has begun dispensing hand-outs of $12,000 in cash to families whose homes were destroyed by Israeli air strikes in southern Beirut.

The group said on Friday that it had compensated 120 families so far with the one-off cash payment, intended to help victims of the bombings rent a flat for a year and furnish it.

Hezbollah has not said where the funds are coming from to compensate people from an estimated 15,000 destroyed homes.

The scheme appears likely to cost at least $150 million.

The Lebanese government has yet to launch any similar scheme.

Nasrallah promised the money
after the truce took hold

A Hezbollah official at one of 12 centres set up in southern Beirut to organise the hand-out said families were being asked to produce an identity card and a certificate of ownership of the property.

"We have full information on all the buildings that have been destroyed or damaged," he said.

"Later on, we will either pay for new flats or rebuild the buildings that were destroyed."

Sayyed Hassan Nasrallah, the head of Hezbollah, promised the money in his first speech after a truce took hold this week.

He said 15,000 dwellings had been completely destroyed in the Israeli bombardment but the guerrilla group, which runs a large network of health, education and social centres, would also pay for repairs to houses that were still standing.

Physical damage

Lebanon's reconstruction chief says Israeli bombardment had inflicted a "disastrous" $3.6 billion worth of physical damage on Lebanon from which it could take years to recover.

Al-Fadl Shalaq, head of the Council for Development and Reconstruction, said the devastation from the 34-day conflict exceeded that caused by Lebanon's 1975-1990 civil war.

"I have witnessed all the wars in Lebanon but I have never seen a war this fierce and I do not see a response to clearing the rubble of war to match it," Reuters quoted him on Friday as saying.