JERUSALEM - Israel said it would lift its stifling air and sea blockade of Lebanon on Thursday, marking a crucial breakthrough in international efforts to rebuild from the war between Israel and Hezbollah guerrillas.

Lebanese employees continue their work on reconstructing a runway at Beirut airport as a Qatari Airways plane touches down despite the Israeli blockade on 04 September 2006. Israel will lift the air and sea blockade imposed on Lebanon at 1500 GMT after receiving international assurances over an arms embargo on Hezbollah, the prime minister's office said. [AFP]

The move, announced Wednesday by the prime minister's office, will be the first major test for the U.N. force charged with keeping the peace and preventing arms shipments from reaching Hezbollah.

It was also a victory for U.N. Secretary-General Kofi Annan, who has repeatedly demanded that Israel end the blockade, and showed some disagreements can be resolved with U.N. mediation.

Israel is slowly pulling its troops out of southern Lebanon as international peacekeepers arrive. However, a deal on the thorniest issue, the return of two Israeli soldiers whose July 12 capture sparked the fighting will be far more difficult to broker, since Israel has demanded their unconditional release but Hezbollah has insisted on a prisoner swap.

Israel imposed an air, land and sea blockade shortly after the war against Hezbollah began. Israel said it was vital to stopping the guerrilla group from resupplying itself with arms from its major patrons, Syria and Iran.

There are no estimates of losses from the blockade, but at one point it caused severe fuel shortages in Lebanon, leading to long lines at gas stations and forcing the electric company to ration power. In recent weeks, some supply ships were allowed to dock after coordinating with Israel, easing the fuel crisis and allowing the electricity authority to lift part of the rationing.

Israel had said it would not end the blockade until a beefed up U.N. force in southern Lebanon could prevent arms shipments to Hezbollah.

On Wednesday, a statement from Israeli Prime Minister Ehud Olmert's office said Annan and Secretary of State Condoleezza Rice told Olmert the international force was ready to monitor the airports and seaports, so Israel agreed to lift the blockade at 6 p.m. (11 a.m. EDT) Thursday.

"We have said from the beginning of the blockade ... that as soon as international troops would arrive, Israel would hand over the implementation of the (arms) embargo to the international troops," Israeli government spokesman Miri Eisin said.

When Israel's decision was announced at a political gathering in Lebanon on Wednesday evening, the crowd broke into noisy applause.

Lebanese President Emile Lahoud, a staunch supporter of Hezbollah, hailed the decision as a victory for Lebanon.

"Lebanon's firm position and its refusal to bow to pressure or blackmail forced Israeli officials to take the decision on lifting the blockade," he said, adding that Israel still has to remove its forces from south Lebanon.

Eisin said Israel was still concerned about arms smuggling to Hezbollah across Lebanon's border with Syria.

"Until that issue is resolved, Israel will continue to reserve our right of self defense to continue to implement the embargo against any arrival of weapons to Hezbollah from Syria," she said, in what appeared to be an implied threat to conduct airstrikes against vehicles carrying arms shipments.

Israel has called for international troops to be stationed along the border, but Lebanon says it can patrol the area itself with only technical support from the U.N. mission. Lebanon has deployed thousands of troops there, sealing off smuggling routes along the rugged mountain frontier. Syria also has promised to improve security along the frontier.

German experts were expected to arrive at Beirut airport Wednesday and German naval forces were to take positions along the coast within two weeks, the Israeli statement said. Until then, Italian, French, British and Greek forces would secure the area, it said.

A sticking point in lifting the siege was Israel's demand that foreign troops be in place first, as opposed to Lebanon's insistence that the blockade be ended before it asked for foreign assistance, according to Lebanese officials.

Under the U.N.-brokered deal, the Beirut government sent a letter to the United Nations on Wednesday evening about the time the Israeli government announced the lifting of the blockade, requesting that Germany monitor shipping into Lebanon, a Lebanese official said, speaking on condition of anonymity because of the sensitivity of the agreement.

Airport security will be handled solely by Lebanese authorities with only technical support from U.N. peacekeepers, the official said.

About 3,250 U.N. troops are in Lebanon, and U.N. officials expect the number to reach 5,000 by late next week. A U.N. cease-fire resolution calls for a 15,000-member U.N. force to patrol south Lebanon, along with 15,000 Lebanese soldiers.

French peacekeepers began their first patrols of Lebanon's bomb-ravaged border Wednesday and were greeted by villagers waving flags and taking pictures.

But in a reminder of the fragility of the peace, two Lebanese explosives experts were killed and one was seriously wounded in the village of Aita al-Jabal as they tried to defuse an artillery shell left over from the war, Lebanese officials said.

The 34-day war, which ended Aug. 14, killed 855 Lebanese and 159 Israelis. During the fighting, Hezbollah fired nearly 4,000 rockets into northern Israel, forcing about 300,000 residents to evacuate and causing hundreds of millions of dollars in damage to buildings and the economy.

Lebanon estimates that Israeli airstrikes and ground attacks caused $3.6 billion in damage. International donors pledged $1 billion to Lebanon last week, but rebuilding efforts could not begin in earnest until Israel ended the blockade.

Enforcing the blockade during the fighting, Israeli warplanes attacked Beirut airport's runways and stopped ships from entering Lebanon without permission. Roads and bridges linking Lebanon with Syria, Lebanon's only land link to the Arab world, were destroyed.

Israel softened the blockade in recent weeks, allowing in some commercial flights and aid ships. Gulf Air announced Wednesday it will start flying to Lebanon on Saturday.

The land route was also reopened, but Israel continued to warn against flying or sailing into Lebanon without prior approval.