Israeli helicopters have fired two missiles into Lebanon, according to witnesses.
Israeli TV said the aircraft struck positions belonging to the Lebanese Hizbollah guerrilla group which is active in the area.
Witnesses said aircraft fired missiles at Hizbollah positions inside south Lebanon. There was no immediate report of casualties and the Shi'ite group said it had not responded.
The Israeli army said it had shot at guerrillas within the flashpoint Shebaa Farms - an Israeli-controlled area that the United Nations calls occupied Syria, but which Lebanon and Syria say is occupied Lebanese soil.
Earlier, the army said soldiers had shot and possibly killed at least one fighter during a gunbattle. A Hizbollah spokesman in Beirut said the group's forces did not respond to Israeli fire.
Violence erupted on Wednesday when Hizbollah attacked an Israeli outpost with gunfire and mortars, killing the Israeli officer. Military sources said the body of a guerrilla had been found in brush after the fighting.
Hizbollah was instrumental in ending Israel's 22-year occupation of southern Lebanon in 2000. The two foes have clashed sporadically in the Shebaa Farms area since then.
A UN resolution called last year for Syria to withdraw from Lebanon and Hizbollah to disarm. Syrian troops pulled out in April under Lebanese and international pressure but the guerrilla group vowed not to lay down its weapons.
Israeli military officials said they believed Hizbollah, which is backed by Syria and Iran, carried out the attack to flex its muscles after Lebanese elections returned an anti-Syrian majority to parliament for the first time since the 1975-1990 civil war.
Residents of southern Lebanon said Israeli warplanes dropped leaflets overnight addressed to the Lebanese people and government.
“Hizbollah, known for serving foreign interests, has again carried out terrorist acts inside Israel to trigger a response that will serve its terrorist existence,” they read.
“Such irresponsible acts could bring destruction and take Lebanon back to the years of horror.“