Israeli special forces battled Hezbollah guerrillas Thursday during a second day of fierce ground fighting in war-ravaged southern Lebanon.
The Israeli offensive is intended to wipe out the remaining capabilities of the Islamic militia, Israeli military officials said.
The Israeli military estimates that its air assault on Lebanon has destroyed about half of Hezbollah's military strength. It is using ground forces to target Hezbollah's remaining artillery, believed hidden in caves, tunnels and basements.
CNN cannot independently confirm Israel's estimation of Hezbollah's military strength.
As Israel and Hezbollah stepped up their assaults, U.N. Secretary-General Kofi Annan demanded "an immediate cessation of hostilities."
While Israel "has a right to defend itself," he said, "the excessive use of force is to be condemned."
The fighting began after Hezbollah guerillas captured two Israeli soldiers during a raid into northern Israel on July 12.
Since then, Lebanese Internal Security Forces has recorded the deaths of 258 civilians, with another 582 injured.
In a speech to diplomats in Beirut Wednesday, Lebanese Prime Minister Fouad Siniora put the death toll at more than 300 -- and said the wounded numbered about 1,000.
Fourteen Israeli soldiers and 15 civilians have been killed, according to Israeli Defense Forces.
"We are aiming and focused at dismantling the capability of this organization, prohibiting it from attacking Israel again and changing the rules of the game in the region," said Israeli Security Minister Isaac Herzog.
The Israeli operation will continue until the mission is complete, he said. While Israel believes "Hezbollah has been hurt considerably," the military operation "is not over yet," he said.
More attacks are expected to target missile launch sites, ammunition depots, and Hezbollah bases in southern Beirut and southern Lebanon, the Israel Defense Forces said.
The din of machine guns and rocket-propelled grenades filled the air on the Israeli side of the border, CNN's Paula Newton said Thursday.
Hezbollah militants used anti-tank missiles to destroy an Israeli tank and an armored bulldozer. Three Israeli soldiers were wounded, one seriously, in the fighting Thursday, the IDF said.
There has been no information released about Hezbollah casualties in the two days of ground fighting.
A huge blast rocked southern Beirut shortly after daybreak Thursday. Lebanese TV showed a large plume of smoke over the city skyline.
It was not immediately clear what had been targeted or hit.
Israeli airstrikes also hit three Hezbollah training camps and Hezbollah-run Al Manar television in eastern Lebanon, Israel Defense Forces said on Thursday.
Hours earlier, dozens of Israeli warplanes dropped 23 tons of bombs on a Hezbollah bunker, military sources said.
"We thought that the Hezbollah leadership was gathered there," Israeli Foreign Ministry official Yigal Palmor said Thursday. "We have no information as of this moment whether they were there or not or whether there were any casualties or not."
Hezbollah said none of its leaders was in the bunker at the time.
Meanwhile, Hezbollah guerrillas fired Katyusha rockets on cities in northern Israel, including in and around Tiberias and Carmiel, according to IDF. There were no reports of injuries.
The United States and Israel consider Hezbollah a terrorist organization. The group, which has claimed responsibility for terrorist acts, also operates an extensive network of social services in Lebanon. In addition, Hezbollah holds seats in the Lebanese parliament.
Siniora estimated that the Israeli onslaught has displaced as many as a half-million Lebanese.
His plea for a cease-fire was echoed by United Nations' Deputy Secretary- General Mark Malloch Brown.
Israel has rejected calls for a cease-fire until it can push Hezbollah back from its northern frontier and retrieve its two captured soldiers. Israel Defense Forces have dropped leaflets written in Arabic to warn Lebanese civilians of impending operations.
"Do not sleep or stand with Hezbollah in the same place," the leaflets warned.
"We are calling on the Lebanese people and army to avoid giving aid -- direct or indirect -- to Hezbollah elements. Anyone who does so will expose themselves and their lives to danger."
In other developments: