The Israeli army exchanged fire with Hezbollah militants along the Lebanese border on Sunday, as tensions between the two long-standing foes erupted into one of the worst clashes in years.

The Israeli military said several anti-tank missiles were fired from Lebanon towards the village of Avivim, just over the border in Israel.

Hezbollah said the attack had destroyed an Israeli military vehicle and "killed and wounded those inside". But the Israeli army later denied that any soldiers had been killed.

A statement from the Israeli military said it had responded by firing around 100 artillery shells towards the source of the missiles in the Lebanese village of Maroun al-Ras, and ordered residents near the border to remain inside. ​

Hezbollah leader Sheik Hassan Nasrallah, pictured in 2012. (AP)

The incident comes amid heightened tensions between Israel and its regional rival, Iran. Israel sees Iran as an existential threat and has acted militarily to curb its growing influence across the Middle East. Those efforts have intensified in recent weeks, as Israel has become increasingly concerned about the spread of advanced missile technology to Iran’s proxies in the region. This month it has launched a series of strikes against Hezbollah targets which it said were linked to the group's missile programme.

One of those strikes killed two Hezbollah operatives in Syria. That was followed by a drone attack in the Lebanese capital Beirut which damaged Hezbollah’s media centre.

Hezbollah leader Hassan Nasrallah had promised to respond to both incidents in a fiery speech last week.

"The need for a response is decided," he said, adding it was about "establishing the rules of engagement and... the logic of protection for the country".

Hezbollah’s television channel celebrated the missile attack later Sunday, saying “the Islamic Resistance carried out the secretary general's promise to retaliate for the two aggressions.”

Meanwhile, Lebanese prime minister Saad Hariri held telephone calls with US Secretary of State Mike Pompeo as well as an adviser to French President Emmanuel Macron urging Washington and Paris to intervene in the volatile situation.

In a speech following the flare-up on Sunday, Israel's prime minister Benjamin Netanyahu accused Iran of fomenting the violence.

"A new empire has arisen, the goal of which is to defeat us. They dispatch proxies," he said. "We are dealing with extremist Islam led by various elements, but in the end, the biggest threat to our existence comes from Iran."

An Israeli military spokesman said later Sunday evening that the clashes appeared to have ended, but that the army “maintains an elevated level of readiness."

The latest clashes on the border largely followed a pattern of engagement between the two sides that has held since they fought a devastating war in 2006. Both sides have been careful to limit flare-ups in an effort to avoid another round of serious fighting.

In a similar incident in January 2015, Hezbollah killed two Israeli soldiers in an attack on the border in what was thought to be a response to Israel's killing of six Hezbollah fighters and an Iranian general in Syria that same month.

The 2006 war was sparked by a cross-border raid by Hezbollah to kidnap two Israeli soldiers. Hezbollah had hoped to use the soldiers to pressure Israel to release Lebanese prisoners, but it instead prompted a fierce Israeli invasion that led to the deaths of nearly 1,000 Lebanese civilians. Forty-four Israeli civilians were also killed by Hezbollah rockets.