Katyusha rockets have been fired into northern Israel from Lebanon in the first cross-border attack since last year's war between Israel and Hezbollah.
Hezbollah denied responsibility and both Lebanon and Israel blamed Palestinians based in Lebanon.
There were no casualties reported after the attack on the town of Kiryat Shmona on Sunday.
Israel responded with five artillery shells into southern Lebanon, Lebanese security forces said, but an Israeli army spokesman denied the shelling was aimed at Lebanese territory, calling the exercise "artillery calibration fire" using empty shells fired into Israeli territory.
The shells hit a mountainous area near the town of Shebaa in the eastern sector of the border with Israel, Lebanese sources said. There were no reports of casualties.
Fuad Siniora, Lebanon's prime minister, said the attack had "political goals" and was aimed at destabilising Lebanon by casting doubts about the ability of the army and the UN peacekeeping force in South Lebanon to protect the border zone.
He vowed to bring those responsible to justice, saying: "The state ... will spare no effort in uncovering those who stand behind this incident".
The Lebanese army said three rockets 107 millimetre Katyusha rockets were fired at Israel by "unknown elements" and that it had prevented another rocket being fired.
Troops had found a Katyusha equipped with a timer at the suspected launch area in the village of Taibeh.
The UN peacekeeping force in south Lebanon condemned the attack as a "serious breach" of a truce since last summer's Hezbollah-Israel and called for restraint from all parties.
An official accompanying Ehud Olmert, the Israeli prime minister on a visit to the United States, said Palestinian fighters were apparently behind the attack.
|Lebanon's army said it stopped|
a rocket being fired [AFP]
"The prime minister was updated about the Katyusha rockets immediately after the event and has consulted with the defence minister and foreign minister," Miri Eisen, Olmert's spokeswoman, said.
"It seems that it was Palestinians, not Hezbollah."
The official said Israel viewed the attack with "deep concern" and believed the Palestinians were trying to trigger an Israeli military response, adding: "Israel will not be drawn in."
Olmert said the rocket firing had made for a "very disturbing day" but pointedly stopped short of threatening any military response.
Residents of Kiryat Shmona were ordered into air raid shelters after the rockets hit an industrial zone and a nearby residential area.
Mickey Rosenfeld, a police spokesman, said there were no casualties reported in the town but a car and road had been damaged.
Thousands of Katyusha rockets landed on the area during July and August last year as Israeli troops moved into large areas of southern Lebanon.
An international peacekeeping force was deployed after the war to prevent further rocket attacks.
About 400,000 Palestinian refugees live in Lebanon and they have been affected in recent weeks by fighting between Lebanese troops and armed Palestinian groups.
Sunday's rocket attacks came as the Lebanese army continued to shell suspected Fatah al-Islam positions in Palestinian refugee camp in the north.
The group, which has been battling soldiers in the Nahr al-Barred camp for four weeks, responded with heavy gunfire, witnesses said.