Israeli warplanes struck twice in the Hezbollah stronghold of southern Beirut early on Friday after Shiite leader Sheikh Hassan Nasrallah threatened to launch rockets into Tel Aviv if the Lebanese capital is hit.
Two huge explosions were heard in southern Lebanon at 12:55 am local time (1625 hrs IST) but there were no reports of any casualties.
The Israel Defence Forces had dropped leaflets last night warning residents in the area to leave.
The area has been repeatedly pounded by Israeli air strikes since the recent flare up following abduction of two Israeli soldiers by Hezbollah on July 12.
Nasrallah warned on Thursday that if the IDF attacks Beirut, he would retaliate with attacks on Tel Aviv.
"If you bomb our capital Beirut, we will bomb the capital of your usurping entity... We will bomb Tel Aviv," he said.
However, hours after a barrage of missile attacks by Hezbollah on northern Israel that killed eight persons, the Shiite leader offered cessation of hostilities if the Jewish state stops air strikes against Lebanon.
"Anytime you decide to stop your campaign... we will not fire rockets on any Israeli settlement or city," Nasrallah offered in a televised speech.
Channel One television quoted a senior Israeli defence official as saying that Israel would destroy Lebanon's infrastructure if Hezbollah fires rockets at Tel Aviv.
Meanwhile, Israeli Defence Minister Amir Peretz has told the IDF to prepare for the next stage of military offensive, which would extend its control to all Lebanese territory south of the Litani River.
The IDF was so far aiming at creating a 6-8 km security zone and staying in the territory till an international force replaces them.
Prime Minister Ehud Olmert, however, is said to be reluctant about expanding Israel's ground operation, Ha'aretz newspaper reported.
While Peretz believes that the short-range rocket threat posed by Hezbollah can be neutralized by taking the area up to the Litani, Olmert feels that such a move would not counter the longer-range missile threat posed by Hezbollah, it said.
The move, which would include occupying the port city of Tyre, will require the approval of the security cabinet.