A Lebanese security source and a Hezbollah source told AFP that the commander, Youssef Hashem, had been responsible for the group's military affairs in Iraq and was in a meeting inside a tent when Israel struck.

Israel's military said Hashem was Hezbollah's commander for its south Lebanon front.

Lebanon was drawn into the Middle East war in early March when the Tehran-backed Hezbollah launched rockets towards Israel to avenge a US-Israeli attack that killed Iran's supreme leader Ayatollah Ali Khamenei. Israel has responded with massive strikes across Lebanon and a ground offensive.

A source close to Hezbollah said Hashem is "the highest-ranking official to be targeted since the start of the war".

Another Hezbollah member, Mohammad Baqir al-Nabulsi, was also killed in the strike on the Beirut area of Jnah, the group said.

- 'Sleeping in the open' -

Several large blasts were heard across the city on Wednesday and a column of smoke was seen rising from Jnah, which is home to apartment buildings, cafes and shops.

Hassan Jalwan, who lives nearby, told AFP he heard "big explosions" overnight.

"Nobody knows what's happening," he said, adding that "displaced people have been sleeping in the open" across the area.

Lebanese authorities say the war has forced more than one million people from their homes.

An earlier strike on a car in Khaldeh, just south of the capital, late on Tuesday killed two more people and wounded three, the health ministry said.

An AFP correspondent there saw a charred vehicle and paramedics taking a wounded person away on a stretcher.

Lebanese state media also reported a strike early Wednesday on the Hadath district near Beirut's southern suburbs, which has largely emptied of residents following repeated Israeli strikes.

State media said Israeli artillery and airstrikes also hit Lebanon's south and east.

- Army repositions -

In the south near the border, Israel has said it intends to reoccupy a swathe of Lebanon to create what officials have called a buffer zone to push back Hezbollah. Israel already occupied southern Lebanon for around two decades until 2000.

Defence Minister Israel Katz said Tuesday that "all the houses in the villages adjacent to the border in Lebanon will be demolished".

Katz's Lebanese counterpart Michel Menassa decried those plans, while Canada's Prime Minister Mark Carney denounced what he called an "illegal invasion".

The Lebanese army announced Wednesday "a repositioning and redeployment operation" in the south "as a result of the escalation of the Israeli aggression".

A Lebanese military source told AFP that the army had withdrawn from some southern towns but remained in others.

"Where there is an Israeli incursion or advance, we evacuate," the source said.

"Because... there is a possibility of a direct targeting of the Lebanese army... and even if there is no direct targeting, there is a risk the army could be encircled."

The source said the Israelis had advanced up to 10 kilometres in some places.

Hezbollah early Wednesday claimed cross-border attacks against Israel and said its fighters were engaged in "fierce clashes" with soldiers in the Lebanese town of Shamaa, around five kilometres (three miles) from the border. It also said it was behind rocket fire targeting a group of Israeli soldiers in another area.

Late on Tuesday night, air raid sirens sounded across northern Israel's Galilee region, according to the Israeli military's Home Front Command, hours after what Israeli media said was a barrage of more than 40 rockets fired by Hezbollah.

Israel's military has reported several casualties among its ranks in recent days in south Lebanon.

Lebanese authorities say the war has so far killed more than 1,300 people.