The missiles struck as people slept in the village of Qana, leaving dozens of people trapped beneath flattened homes. Between 40 and 50 people died, said Salam Dayer, a civil defense official at the scene.

Rescuers dug through the rubble with their hands and evacuated shell-shocked elderly residents. At least 20 bodies wrapped in white sheets were taken away, including 10 children and elderly residents.

The Israeli army said it targeted Qana because rockets have been repeatedly launched from the area into Israel. "We were attacking launchers that were firing missiles," said army spokesman Capt. Jacob Dallal, adding that the army dropped leaflets several days ago telling civilians to leave Qana.

Residents said the dead were from four families who had gathered to spend the night on the ground floor of a three-story building, believing they would be safer from bombings.

Hezbollah's al-Manar TV station said 21 children were killed.

"We want this to stop!" shouted Mohammed Ismail, a villager whose brown pants were covered in dust. "May God have mercy on the children. They came here to escape the fighting."

"They are hitting children to bring the fighters to their knees," he said.

Fighting erupted in the Taibeh Project area, about two miles inside Lebanon. The Israeli army said one soldier was moderately wounded.

The fighting came a day after Israeli troops pulled back from the Lebanese border town of Bint Jbail after a week of heavy fighting. Hezbollah guerrillas hailed the retreat as a victory, but the pullback appeared to be in preparation for a new incursion along a different part of the border zone.

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