MARJAYOUN, Lebanon (Reuters) - Israeli troops seized the Christian towns of Marjayoun and Qlaiah in south Lebanon on Thursday, witnesses said, even though Israel says it has put off plans for a broader offensive against Hizbollah guerrillas.
A Reuters journalist said Israeli troops were moving on foot through Marjayoun, about 8 km inside Lebanon. He said the Israelis were also inside Qlaiah and the village of Burj al-Molouk, with tanks deployed on roads nearby.
Fierce fighting erupted in the area and two tanks could be seen on fire just outside Marjayoun.
"I can see two tanks burning some 500 metres from Marjayoun," a resident told Reuters by telephone.
Hizbollah said in a statement it had destroyed seven Israeli tanks, killing or wounding their crews, in fighting in the area. There was no immediate comment from the Israeli army.
The mayor of Marjayoun, Fouad al-Hamra, told Al Jazeera television earlier there had been intense gunfire and shelling before the Israelis arrived at about 3:30 a.m. (0030 GMT).
"We heard the sounds of tanks and now I can see a big fire on the eastern outskirts of the town," he said by telephone.
Marjayoun, a town of 3,000, served as the headquarters of the pro-Israeli South Lebanon Army militia during Israel's 22-year occupation of the region that ended in 2000. Qlaiah has a population of about 7,000, according to U.N. figures.
An Israeli cabinet minister confirmed that plans for an expanded ground offensive, approved on Wednesday, had been put on hold to allow more time for U.S.-led diplomatic efforts to halt the Lebanon war, now in its fifth week.
"There is a certain diplomatic process under way," Tourism Minister Yitzhak Herzog said. "We can allow a little more time to see if there's a possibility for a diplomatic process."
Herzog, a member of Israel's security cabinet, made clear the military option would go ahead if talks failed.
"If there won't be a diplomatic solution, there will be a need to remove this threat," he told Israel's Army Radio, referring to more than 3,300 Hizbollah rockets fired into northern Israel since hostilities erupted on July 12.
"GRAVEYARD FOR INVADERS"
Hizbollah guerrillas were battling Israeli forces up to 10 km inside Lebanon after the Shi'ite Muslim group's chief vowed to turn the south into a graveyard for the invaders.
An Israeli military source said the incursion in the eastern sector aimed to stop Hizbollah firing rockets at the northern Israeli town of Kiryat Shmona from the Khiam border area.
Further west, an Israeli air strike killed a motorcyclist near Tyre and another air raid hit the offices of a Hizbollah charity in the southern port city, a Reuters journalist said.
World powers are split on a U.N. resolution on Lebanon. Paris and Washington disagree on when the foreign force, possibly led by France, should move in and when Israel should withdraw.
Lebanon wants Israeli troops out quickly, but Israel says it will leave only when foreign troops supporting the Lebanese army take over. The United States agrees with Israel, warning against a security vacuum that would allow Hizbollah to regroup.
The Israeli army said 15 of its soldiers and 40 Hizbollah guerrillas had been killed on Wednesday, one of the bloodiest days of fighting in the conflict that began after Hizbollah captured two Israeli soldiers in a cross-border raid last month.
Israeli television said the bodies of Iranian Revolutionary Guards had been found among guerrillas killed in Lebanon. There was no independent confirmation. Hizbollah denied the report.
Hizbollah leader Sayyed Hassan Nasrallah warned Israel against widening its assault, saying his fighters would turn the south into a "graveyard for the invading Zionists".
In a televised speech, he urged Arab residents of Haifa to leave the Israeli city to avoid Hizbollah rocket fire.
Israel's security cabinet on Wednesday approved plans to send troops further into Lebanon, possibly to the Litani river, up to 20 km from the border. A senior political source said the expanded offensive could last 30 days.
The war has cost the lives of at least 1,006 people in Lebanon, mostly civilians, and 116 Israelis, mostly soldiers.
Diplomats are still working on a U.N. resolution aimed at ending the war but no Security Council vote seems imminent.
Washington's U.N. envoy, John Bolton, made clear no deal had been struck. "There are areas where we are still not in agreement," he said. "I don't want to appear to minimise that."
(Additional reporting by Beirut, Jerusalem, United Nations, Washington and Dubai bureaux)
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