Hizbollah vowed to retaliate. "This horrific massacre will not go without a response," it said. The governing Palestinian movement Hamas also pledged to hit back with attacks on Israel.

Another Israeli air strike killed five civilians, including two children, in their house in the southern village of Yaroun.

About 146 rockets fired by Hizbollah hit Israel on Sunday, wounding six people, police said. At least three slammed into the city of Haifa.

Rice said it was "time to get to a ceasefire", but insisted this required changing the pre-war status quo. The conflict erupted after Hizbollah seized two Israeli soldiers on July 12.

The United States says the priority is to remove the threat posed to Israel by Hizbollah, which is backed by Iran and Syria.

At least 545 people have been killed in Lebanon, although the health minister estimated the toll at 750 including unrecovered bodies. Fifty-one Israelis have also been killed.

In Qana, rescue workers laid a girl's body on the ground and ran to search for more. They heaved hunks of concrete off a dead child crushed underneath. The rigid corpse of a young boy, his bloody face disfigured, lay near a pulverised building.

Israeli troops pushed into southeast Lebanon on Sunday and battled Hizbollah fighters after crossing the border overnight.

A spokesman for U.N. peacekeepers said Israeli forces were near the villages of Kfar Kila, Taibe and Deir Mimas. Hizbollah hit an Israeli tank with a missile, lightly wounding four soldiers who were evacuated, the Israeli army said.

The army said four soldiers on foot were wounded in another incident, and five Hizbollah guerrillas were killed. Hizbollah said it had lost three fighters.