Hezbollah claimed responsibility for an anti-tank missile attack that hit an Israeli military vehicle near the Israeli-Lebanese border on Wednesday, a statement issued by the group said.
The statement read that at approximately 11:25 am, the "Qunaitra Martyrs" brigade targeted an Israeli army convoy with missiles as they passed through the occupied Shebaa Farms.
The convoy was comprised of several military vehicles that had a number of Israeli soldiers and officers on board, killing two and causing casualties, the statement added.
Lebanese security officials said Israel later fired at least 35 artillery shells into Lebanon in retaliation. Schools in some southern Lebanese villages were also evacuated as a result.
Meanwhile, Lebanese army units deployed along the border with Israel, combing the area near al-Ghajar and al-Maysat.
Sources told LBCI that the military operation along the border with Israel was carried out by blowing up explosive devices while military vehicles passed through the Shebaa Farms.
Following the attack, Israeli medics confirmed that two Israeli soldiers were killed and several were wounded.
There were initial reports on Lebanese media that an Israeli soldier was captured during the attack, but the Israeli army denied it, as did a Lebanese political source.
The Israeli media said that airports in Chaifa and Rosh Pina were shut due to the latest security situation in north Israel.
Prime Minister Benjamin Netanyahu, who has made security his top priority ahead of parliamentary elections on March 17, said Israel was "prepared to act powerfully on all fronts," adding: "Security comes before everything else."
His office accused Iran of being behind what was described as a "criminal terror attack".
“All those who try to challenge us on the North, I suggest you look at what happened in the Gaza Strip," Israel Media quoted Netanyahu as saying.
"Those that play with fire will get fire," Netanyahu said at a memorial for International Holocaust Remembrance Day.
A retired Israeli army officer, Major-General Israel Ziv, said he believed Wednesday's assault was an attempt by Hezbollah to draw Israel more deeply into the war in Syria, where Hezbollah is fighting alongside forces loyal to President Assad.
"Israel understands that we need to contain things," he said. "Israel needs to protect its interests but not take any unnecessary steps that may pull us into the conflict in Syria."
Israel told the UN Security Council that it will take all necessary measures to defend itself after an exchange of fire between Hezbollah and Israel that has raised the threat of a full-blown conflict.
"Israel will not stand by as Hezbollah targets Israelis," Israel's U.N. Ambassador Ron Prosor said in a letter to the Security Council.
"Israel will not accept any attacks on its territory and it will exercise its right to self-defense and take all necessary measures to protect its population," he added.
The incident came several hours after Israel launched an air strike in Syria amid tensions that have escalated in the frontier area over the past 10 days.
An Israeli air strike on a Hezbollah convoy near the Golan on Jan. 18, killed a commander of the armed group, the son of its late military leader, Imad Moughniyeh, and Iranian Revolutionary Guard General Mohammed Allahdadi.
Both Hezbollah, which is backed by Iran and fought a 34-day war with Israel in 2006, and the Revolutionary Guards vowed to avenge the deaths.
Since that air strike, troops and civilians in northern Israel and the Golan Heights have been on heightened alert and Israel has deployed Iron Dome rocket interceptors near the Syrian border.