"There is a certain diplomatic process under way," Tourism Minister Yitzhak Herzog told Israel's Army Radio. "We can allow a little more time to see if there's a possibility for a diplomatic process."

But Herzog, a member of Israel's decision-making security cabinet, made clear Israel would go ahead with its military plans if the talks failed.

"If there won't be a diplomatic solution, there will be a need to remove this threat," he added, referring to more than 3,300 rockets Hezbollah guerrillas have rained on northern Israel since hostilities erupted on July 12.

Israel Radio quoted a senior political source as saying Israel was pessimistic about chances the diplomatic efforts would succeed, adding "these efforts could collapse within hours".

Israel's Maariv daily said in a front-page report that Israeli leaders decided after midnight to suspend plans they had decided on hours earlier to widen the four-week-old assault.

Israeli forces currently operate within around 8 km (5 miles) of the border but Wednesday's decision could bring the army to the Litani River, some 20 km (12.5 miles) into Lebanon.

Israel's Channel Two television reported on Wednesday evening that the expanded offensive was under way, citing movement of troops and tanks from the northern town of Kiryat Shmona toward al-Khiam. But the army said the incursion was a local operation against Hezbollah rocket crews in al-Khiam.

Earlier Israeli troops seized the Christian towns of Marjayoun and Qlaiah in south Lebanon on Thursday, witnesses said, even though Israel says it has put off plans for a broader offensive against Hezbollah guerrillas.

A Reuters journalist said Israeli troops had moved on foot through Marjayoun, about 8 km (5 miles) inside Lebanon, as well as Qlaiah and the nearby village of Burj al-Molouk.

They were followed by tanks, which deployed on roads nearby, drawing intense Hezbollah rocket and mortar fire.

"I can see two tanks burning some 500 meters from Marjayoun," one resident told Reuters by telephone.

A third tank arrived later and removed several casualties, he said, adding that Hezbollah fighters were raining rocket and mortar fire on the Israeli force between Marjayoun and Khiam.

Hezbollah said in a statement it had destroyed 11 Israeli tanks, killing or wounding their crews, in fighting in the area. It said it had knocked out two more two tanks near the village of Ainata to the west. Israel's army had no immediate comment.

Marjayoun, a town of 3,000, served as the headquarters of the pro-Israeli South Lebanon Army militia during Israel's 22-year occupation of the region that ended in 2000. Qlaiah has a population of about 7,000, according to UN figures.

An Israeli cabinet minister said plans for an expanded ground offensive, approved on Wednesday, had been put on hold to allow more time for US-led diplomatic efforts to bear fruit.

"There is a certain diplomatic process under way," Tourism Minister Yitzhak Herzog said. "We can allow a little more time to see if there's a possibility for a diplomatic process."

Herzog, a member of Israel's security cabinet, made clear the military option would go ahead if talks failed.

"If there won't be a diplomatic solution, there will be a need to remove this threat," he told Israel's Army Radio, referring to more than 3,300 Hezbollah rockets fired into northern Israel since hostilities erupted on July 12.

An Israeli military source said the incursion in the eastern sector aimed to stop Hezbollah firing rockets at the northern Israeli town of Kiryat Shmona from the Khiam border area.

The new thrust into Lebanon occurred hours after Hezbollah's chief vowed to turn the south into a graveyard for the invaders.

But Sayyed Hassan Nasrallah also said Hezbollah supported a Lebanese government decision to send 15,000 troops to the border if that would promote a peaceful solution.

"If everyone sees that deploying the army will help find a way out politically that would result in the halting of aggression ... this for us is a national and honourable way out," he said in a televised address.

Hezbollah, which has controlled the south since Israeli occupation troops left in 2000, has long resisted international pressure on Lebanon to deploy the army to the south.

The UN Security Council has been divided over a resolution aimed at halting the fighting and stabilizing the area with the deployment of an international force to back the Lebanese army.

Lebanon wants an immediate ceasefire and a swift Israeli withdrawal. Israel says it will fight on until foreign troops and the Lebanese army move in -- a stance backed by Washington, which fears a security vacuum that could let Hezbollah regroup.

France, which may lead the foreign force, does not want it to deploy before a ceasefire and a political agreement.

No Security Council vote seems imminent.