Israeli authorities have reportedly issued a warning to Hizbullah over the alleged development of what they said were “rocket manufacturing installations in Lebanon mainly situated in Hizbullah strongholds,” Israeli media reports said on Monday.

Israel's Defense Minister Avigdor Liberman warned “Hizbullah over the development of Iranian rocket manufacturing installations inside Lebanon,” the reports said.

It added that the Israeli security services are “seriously” studying the possibility of “destroying the Iranian weapons factory.”

Hizbullah and Israel have fought many battles including a devastating 34-day war in 2006 that killed 1,200 people in Lebanon, mainly civilians, and 160 Israelis, mostly soldiers.

Border skirmishes have broken out occasionally since then, and Hizbullah leader Sayyed Hassan Nasrallah said in his latest statement that any future confrontation would be "very costly for Israel".

Tensions were rising this week along the frontier, with Israel accusing Hizbullah of expanding observation posts to conduct reconnaissance missions across the border.