Israel has hit the Beirut offices of Hezbollah leader Hassan Nasrallah, but the militant was unhurt in the raid, his group says.
In remarks broadcast afterwards, he declared "open war" on Israel. It was not clear when the tape was recorded.
The offensive, in which more than 60 Lebanese have died, follows Hezbollah's capture of two Israeli soldiers.
Israel's chief of staff, Dan Halutz, said the soldiers were alive and in a "reasonable" state of health.
Hezbollah has continued rocket attacks on northern Israel - 70 were fired on Friday alone.
A mother and daughter died in an attack on the town of Meron. Two Israelis died in attacks on Thursday.
In his address Sheikh Nasrallah said: "Look at the warship that has attacked Beirut, while it burns and sinks before your very eyes."
Israel later confirmed that one of its warships had been lightly damaged by rockets fired from the shore in Lebanon.
'Just a finger'
In an emergency meeting of the UN Security Council, Lebanon called for an end to the Israeli operation.
"The Security Council meets today in the shadow of a widespread, barbaric aggression waged by Israel to this very moment against my nation, Lebanon," said Nouhad Mahmoud, ambassador to the UN.
The offensive was destroying infrastructure and causing the death of innocent civilians in full view of the international community, he said.
Israeli Ambassador Dan Gillerman said Israel had no choice but to react to Hezbollah's aggression, describing the group as "merely the finger on the bloodstained and long-reaching arms of Syria and Iran".
The Lebanese people were bearing the cost of their government's inability to disarm Hezbollah, he said.
US Ambassador John Bolton called on the Lebanese government to disarm Hezbollah.
"All militias in Lebanon, including Hezbollah, must disarm and disband immediately, and the Lebanese government must extend and exercise its sole and exclusive control over all Lebanese territory," he said.
Radio station hit
Israeli aircraft attacked Hezbollah's southern Beirut stronghold for a third time on Friday, targeting the Haret Hreik area where it has its security and media headquarters.
Two bridges in southern Beirut were also hit.
ISRAEL IN LEBANON
March 1978: Israel invades to stop Palestinian attacks
1982: Full-scale invasion; Israel occupies Beirut; pro-Israel militias massacre Palestinian refugees
May 1983: Israel pulls back, but keeps "security zone"
February 1992: Israeli air strike kills Hezbollah leader
1996: Israel launches "Grapes of Wrath" raids on Hezbollah; 100 civilians die under Israeli shelling of UN base at Qana
May 2000: Israel withdraws troops from Lebanon
January 2004: Prisoners-bodies swap agreed between Hezbollah and Israel
In an earlier attack, Israeli aircraft fired missiles at the group's radio station, but hit a nearby apartment building instead, Hezbollah sources said.
Israel had warned of the attacks - telling residents by leaflet to stay away from Hezbollah locations.
Residents hoarded food and queued for petrol, amid fears of prolonged violence.
The escalation has sparked international calls for restraint.
French President Jacques Chirac said the Israeli air strikes were "completely disproportionate" and the Vatican described them as an attack on a sovereign and free nation.
Israeli Prime Minister Ehud Olmert said he would agree to a ceasefire if Hezbollah returned the two captured soldiers and stopped firing rockets at northern Israel, and Lebanon implemented UN Security Council resolution 1559, calling for the disarmament of the militant group.
US President George W Bush has promised to press Israel to halt attacks, the Lebanese prime minister has said.
But White House spokesman Tony Snow said Mr Bush would not take military decisions for Israel.
'Playing with fire'
Israel has said the international community should make it clear to Iran and Syria - which Israel says form an "axis of terror" with Hezbollah and Palestinian militants Hamas - that they were "playing with fire".
Iranian President Mahmoud Ahmadinejad told Syrian President Bashar al-Assad in a telephone call that there would be a "fierce response" to any Israeli attack on Syria.
The Israeli offensive follows a day of heavy fighting on Wednesday in which the Israelis suffered their worst losses on the border for several years.
Eight soldiers were killed and two were injured, in addition to the two captured in a Hezbollah ambush.
Hezbollah has said the captured soldiers will not be returned without a release deal for Palestinian, Lebanese and other Arab prisoners held in Israeli jails.
Israel is also continuing a separate offensive in the Gaza Strip. An Israeli soldier was captured there last month.