Syria branded the killing a "cowardly and terrorist act" and said an investigation was under way.
Iran, which backs Hezbollah, also accused Israel of carrying out the attack.
"This measure is the result and another prominent example of organised state terrorism by the Zionist regime [Israel]," Mohammad Ali Hosseini, Iran's foreign ministry spokesman, told Iran's state news agency Irna.
The Palestinian movement Hamas said the killing was a "new example of Zionist gangsterism" and called on the Arab world to unite against Israel.
"We urge the Muslim and Arab nations to act decisively against the Zionist [Israeli] octopus that threatens the security of Arab and Muslim countries," Sami Abu Zuhri, a Hamas official, said.
The Israeli prime minister's office denied allegations that it had played any role in the killing.
"Israel rejects the attempts of terror elements to attribute to Israel any involvement in this incident," Ehud Olmert's office said in a statement on Wednesday.
But Gideon Ezra, the Israeli environment minister, hailed the killing.
"I, of course, do not know who carried out the assassination of Imad, but he should be blessed," he said.
The US also welcomed Moghaniyah's killing, saying that he had been responsible for many deaths.
"The world is a better place without this man in it. He was a cold-blooded killer, a mass murderer and a terrorist responsible for countless innocent lives lost," Sean McCormack, the US state department spokesman, said.
"One way or another he was brought to justice."
|Moghaniyah's father, left, and grandfather |
mourning his death in Beirut [AFP]
Hezbollah's al-Manar television said Moghaniyah's funeral would be held in Beirut on Thursday, coinciding with the third anniversary of the death of Rafiq al-Hariri, a former Lebanese prime minister who was killed in a bomb blast in Beirut in 2005.
Al-Hariri's death was blamed on Syria, which also backs Hezbollah, and his son, Saad al-Hariri, leads the ruling March 14 coalition bloc in Lebanon, which has faced growing opposition from Hezbollah and its political allies.
Moghaniyah's death comes amid a continuing political power vacuum in Lebanon, with opposing political factions failing to agree on a new president and the distribution of key cabinet portfolios.
Also known as Hajj Radhwan, Moghaniyah was widely suspected of being behind a wave of Western hostage-taking in Lebanon in the 1980s, claims denied by Hezbollah.
According to the US and the West, he was a "top terrorist" and was involved in the bombing of the US embassy in Beirut in April 1983.
The US also claims he was involved in the killing of hundreds of US marines and French paratroopers in simultaneous truck bomb attacks in October 1983.
Al Jazeera's Rula Amin said that Moghaniyah was considered by Hezbollah to be almost as important as Hassan Nasrallah, the organisation's secretary-general.
Amin said that the fact that he was killed in Damascus was a serious security breach for the Syrian government and that his presence in Syria was significant since he had been underground for years.
|Moghaniyah died in a bomb blast in |
Damascus on Tuesday [AFP]
There had been many attempts on Moghaniyah's life in the past 20 years, she said.
The blast late on Tuesday took place in the upmarket Kafar Soussa residential neighbourhood of Damascus.
Israeli news media predicted that Hezbollah would attempt to carry out revenge attacks against Israeli targets for the death of "the most dangerous of terrorists in the Middle East in the past 30 years".
"The score has been settled: Imad Moghaniyah was liquidated in Damascus," read the headline on YNetNews, the website of Israel's biggest-circulation daily, the Yediot Aharonot.
Privately run Channel Two television immediately called for security to be increased at Israeli diplomatic missions around the world.