Israel says it will keep control over an area in southern Lebanon until an international force can be deployed.
Defence Minister Amir Peretz said: "We have no other option. We have to build a new security strip that will be a cover for our forces."
His comments came as US Secretary of State Condoleezza Rice ended a regional tour before heading for talks in Rome.
Hostilities are continuing, with fresh explosions reported in Beirut and Hezbollah rocket attacks on Haifa.
More than 380 Lebanese and 42 Israelis have died in nearly two weeks of conflict in Lebanon, which began after Hezbollah captured two Israeli soldiers in a cross-border raid on 12 July.
Another soldier was seized by Palestinian militants earlier.
In the latest military action:
- Israeli warplanes have reportedly hit a UN observation post in south Lebanon. A UN spokesman quoted by Reuters news agency said a bomb hit the post in the Khiam area, but he would not confirm reports from Lebanese security sources that four peacekeepers were killed
- The Israeli army said it had killed a senior Hezbollah commander, Abu Jaafar, in fighting in southern Lebanon
- Earlier the UN had said Israeli forces were now in control of the town of Bint Jbeil after fierce fighting and were moving on the village of Yaroun to the south
- Israel resumed air raids on Beirut, with explosions heard in southern suburbs - a Hezbollah stronghold
- Hezbollah maintained fire of Katyusha rockets into Israel, killing a 15-year-old Arab-Israeli girl in the northern Israeli village of Maghar and striking Haifa with a large salvo
- Hezbollah said 27 of its fighters had been killed as of Monday, but the Israeli military said it had killed "some dozens".
Mr Peretz said a zone in southern Lebanon would be maintained "under the control of our forces if there is not a multinational force".
He did not specify whether Israeli troops would remain there but insisted they would "continue to control [Hezbollah]" in their operations.
Hezbollah has maintained its rocket fire into Haifa
Israeli government sources have estimated the width of the zone at anything from three to 10km (1.9-6.2 miles).
An unnamed Israeli official quoted by Reuters news agency said between 10,000 and 20,000 international peacekeepers would be needed.
BBC defence and security correspondent Rob Watson says Israeli details on the zone - and how it will be secured - are far from clear.
He says it is possible Mr Peretz is trying to put pressure on the international community to deliver the peacekeeping force.
The idea of the multinational force is likely to be high on the agenda of a key international ministerial meeting on the crisis in Rome on Wednesday.
The UN has had a military force - Unifil - in Lebanon to patrol the border since 1978 and is currently 2,000 strong.
Earlier, Ms Rice had expressed concern for the suffering of "innocent people" in the fighting during her tour of the Middle East.
She met Israeli PM Ehud Olmert and later Palestinian President Mahmoud Abbas.
Mr Abbas called for an immediate end to "aggression against the Gaza Strip and the West Bank" and for an "immediate ceasefire" in Lebanon.
Ms Rice said the only solution was a sustainable and enduring peace.
Her words were reinforced later by US President George W Bush who said: "I support a sustainable ceasefire that will bring about an end to violence... Our mission and our goal is to have a lasting peace, not a temporary peace."
'New' Middle East
In his meeting with Ms Rice, Mr Olmert said he was "very conscious" of the humanitarian needs of Lebanon's civilians, but insisted Israel was defending itself against terrorism.
Correspondents say that Ms Rice was unlikely to have called for an end to Israel's military offensive during her talks with the Israeli leader.
The BBC's World Affairs Editor John Simpson, in Jerusalem, says it was understood that Ms Rice would tell Israel that the US will allow it more time to continue its military operations.
Ms Rice has, however, also been highlighting the need for Israel to consider the humanitarian needs of both Lebanon and the Palestinian people and the need for a durable peace.
She said: "It is time for a new Middle East, it is time to say to those who do not want a different kind of Middle East that we will prevail; they will not."
Ms Rice arrived in Israel from Beirut, where she met Lebanon's Prime Minister Fouad Siniora.