Israel Defense Forces exchanged fire with the Lebanese army on Tuesday, killing three Lebanese soldiers and a Lebanese journalist, in what appeared to be the most serious military confrontation since Israel's month-long war with Hezbollah in 2006.

The Lebanese army confirmed that two of its troops had been killed when Israeli forces fired on a vehicle in which they were traveling, setting it on fire and wounding another.

Open gallery view A UNIFIL peacekeeper waves a UN flag as Israeli troops patrol the border fence in the southern Lebanese village of Adaisseh, Lebanon on Tuesday, Aug. 3, 2010. Credit: AP

In Lebanon, security sources said that Israeli shells fired at the southern Lebanese border village of Aadassi hit a house, wounding two - a soldier and a civilian.

Lebanese troops responded with artillery fire, Lebanese press reports said, while eyewitnesses said fire had broken out in two buildings in the village.

"It started when the Israelis wanted to cut a tree down inside Lebanon," one security source in Lebanon said. "The Lebanese army fired warning shots at them and they responded by shelling."

The Lebanese al-Nahar newspaper reported that a journalist from the al-Akhbar newspaper was killed during the clash.

Open gallery view A frame from television footage showing smoke from weapons fire on Israel's northern border, August 3, 2010. Credit: Channel 2

Since the end of the Second Lebanon War, the IDF has conducted patrols up to the international border, which in some places is on the Lebanese side of the border fence. It is possible that Tuesday's incident was caused by one of the sides misidentifying the correct location of the border. In Lebanon, there was a report that Lebanese soldiers had demanded that Israeli troops leave the area before the exchange of fire took place.

Responding to the incident, Foreign Minister Avigdor Lieberman authorized Israel's UN ambassador Gabriella Shalev to lodge an official complaint against Lebanon with the UN Security Council.

Open gallery view IDF troops deployed near Israel's northern border after clashes with Lebanese troops, August 3, 2010. Credit: Zahal Kaminiski

In a statement, the Israeli government blamed Lebanon for provoking the clash, saying it took a particularly grave view of the action as IDF soldiers had been working in complete coordination with UN peacekeepers.

"Israel sees this incident as a violation of UN Security Council resolution 1701, one of a long line of violations, first of which is the massive arming of Hezbollah in southern Lebanon," the statement read. "Israel views the government of Lebanon as responsible for this grave event and warns of possible consequences if these violations continue."

Also on Tuesday there were reports that a Katyusha rocket fired from Lebanon struck the northern Galilee - but police dispatched to the area could find no trace of an impact.

Residents living close to border reported hearing several loud explosions.

Aharon Valensi, head of the Upper Galilee Regional Council, told television news that residents of the area had been told to take cover in bomb shelters.

"We're ready," he said. "The IDF prepared us for situations like this and we just hope that it is only a localized incident."

Israeli military engineering units maintain a security fence along the border with southern Lebanon. The region has traditionally been a stronghold for Hezbollah but regular Lebanese troops returned to the area in 2006 following Israel's summer war with the Shi'a militant group.

A 12,000-strong United Nations peacekeeping force, UNIFIL, is also deployed in the area.

Following news of the incident, UNIFIL issued a statement calling on both armies to show "maximum restraint" and prevent an escalation of hostilities.

Tuesday's clash follows rocket attacks on Monday on the southern city of Eilat and neighboring Aqaba in Jordan, in which a Jordanian citizen was killed and five others were injured.