In his speech, which marked Muslim holy day of Ashura, Nasrallah said: "Your 2006 war will be but a walk in the park compared to what we have prepared for you in the event of a new offensive.

"We have to act as though all possibilities are real and open  (against Israel) and we must always be ready for any eventuality." 

"We are ready to sacrifice our souls, our brothers and sisters, our children, our loved ones for what we believe in."

Egypt attacked

The Hezbollah leader also reiterated past criticism of Egypt for failing to open its border with Gaza and blasted the United Nation Security Council for not acting to denounce the Israeli offensive that has left nearly 700 Palestinians dead.

"Does the government in Egypt need more than 650 victims and 2,500 wounded to open the Rafah crossing once and for all to help the people of Gaza toward victory?" Nasrallah said.

"I am simply asking for the opening of a crossing and not another front."

He also commended Hugo Chavez, Venezuela's president, for expelling Israel's ambassador to Caracas on Tuesday saying that all countries, including Arab states, must follow his example.

"Arab governments must learn from this great Latin American leader to show their solidarity with the Palestinian people and must cut relations with Israel," Nasrallah said.

Jordan, Egypt and Mauritania are the only Arab countries to have diplomatic relations with Israel.