Senior UN envoy Terje Roed-Larsen said the truce that halted the 34-day war had provided the Lebanese government with a good chance to extend its authority over all of the country.

"We also do believe that unfortunately there is a tilting edge where things very easily, within the next weeks or months, can slide out of control," Roed-Larsen told reporters in Beirut.

"This is why it's so important that all parties concerned exercise utmost restraint in this situation in order to give the Lebanese army the possibility of deploying fully along all borders of Lebanon, and particularly in the south, and also to allow the international community to provide troops."

A 30,000-strong force is envisaged for south Lebanon, made up of Lebanese and UN troops in equal number.

UN Secretary-General Kofi Annan said on Saturday Israel's commando raid on a Hezbollah stronghold deep inside Lebanon had violated the truce that came into effect on August 14.

Israel said the operation, in which commandos were airlifted into the area by helicopter, was defensive and designed to disrupt weapons supplies to Hezbollah from Syria and Iran.

It denied it had violated the UN truce resolution, which allows it to act in self-defense, and accused Hezbollah of a breach of the ceasefire by smuggling weapons.

One Israeli soldier was killed and two wounded when the commandos clashed with Hezbollah guerrillas near the village of Bodai, 26km from the Syrian border.

Hezbollah denied it had suffered any casualties after security sources in Lebanon said three guerrillas were killed.

The Lebanese government vowed to crush any attempt on the Lebanese side of the border to break the truce, saying anyone attacking Israel would be considered a traitor.

"The army will be very tough in dealing with such an issue," Lebanese Defense Minister Elias al-Murr told a news conference.

"Any rocket fired from Lebanon will benefit Israel," he said, suggesting such an incident would provide a pretext for the Jewish state to attack Lebanon.

The minister said he was confident Hezbollah would stick to the truce and not try to rearm.

Murr said the army now controlled the entire border with Syria and would crack down on arms shipments. "There is no flexibility on arms smuggling," he said.

Israeli reconnaissance planes flew over Lebanon on Sunday. Witnesses and Lebanese security sources said high-altitude flights covered virtually the whole country, from its war-torn south to close to the border with Syria in the north and east.

In Jerusalem, Israel's top general conceded his army had failed to destroy Hezbollah during the war, which claimed 1,183 lives in Lebanon and 157 in Israel.

"The feeling of the public is that it was not a knockout blow," Lieutenant General Dan Halutz told the Israeli cabinet, according to a government source.

France said it had asked European Union president Finland to call a meeting of the bloc's member states to discuss Lebanon. A Finnish official said the EU's Political and Security Committee would meet on Wednesday.

Lebanese Prime Minister Fouad Siniora inspected damage in Beirut's southern suburbs, a Hezbollah stronghold ravaged by Israeli air strikes.

"This is a crime against humanity committed by Israel here and in other areas of Lebanon," he said in Haret Hreik.

Iran said it was working on an aid package to help rebuild shattered areas of Lebanon, but a senior Foreign Ministry official said nothing had yet been decided.

Hezbollah began last week paying cash compensation to the former occupants of 15,000 destroyed homes and has vowed to repair thousands more homes damaged by Israel across Lebanon.

Israel and the United States have expressed concern that Hezbollah will use Iranian money to rebuild Lebanon, consolidating the group's standing.

Hundreds of thousands of refugees have returned to their ravaged villages in south Lebanon since the truce.

"They are going to need a year to clear the rubble, to rebuild, and to start again," said Cassandra Nelson of aid group Mercy Corps.