Israel has rejected a United Nations call for a three-day truce in southern Lebanon, as US Secretary of State Condoleezza Rice arrives in Israel.
Many have been forced from their homes, but others remain trapped
The UN says children, the elderly and disabled people are trapped and supplies are short.
But an Israeli spokesman said there was no need for a truce as a humanitarian corridor to the area had been opened.
Israeli missiles landed near the main Lebanese border crossing into Syria on Saturday, witnesses and officials said.
In a separate incident, two Indian soldiers with the UN peacekeeping force were wounded in an Israeli strike on their observation post, the UN said.
The incident came days after four UN observers died in an Israeli air strike.
Israeli officials have indicated to the BBC that Israel may be willing to stop fighting as soon as a UN resolution is passed next week - before the arrival of an international peace force - and that they will not insist on the Hezbollah disarming first.
The UN says some 600 people - about a third of them children - have been killed by Israeli action in Lebanon.
They include a mother and her five children killed in a new wave of Israeli air raids in southern Lebanon, Lebanese medics said. Israel said it was investigating.
On Saturday Israeli forces withdrew from the southern Lebanese village of Bint Jbeil - a Hezbollah stronghold - which they had been trying to take for some days and where they sustained their heaviest one-day losses since the campaign began.
Hezbollah has continued firing hundreds of rockets into Israel - several hit the northern Israel town of Safed on Saturday.
In a new message, Hezbollah leader Hassan Nasrallah said more central Israeli cities would be targeted if the Israeli offensive continued.
A total of 51 Israelis, including at least 18 civilians, have been killed during the conflict.
The Israeli assault began after Hezbollah captured two Israeli soldiers and killed eight in a cross-border raid on 12 July.
The US secretary of state is expected to talk to Israeli and Lebanese leaders about proposals to deploy a multinational force, as part of what US President George W Bush calls a viable plan for ending hostilities.
World leaders are due to discuss a deployment at a meeting at the UN headquarters in New York on Monday.
Israeli officials told the BBC that a ceasefire must meet certain key conditions, including a guarantee that Hezbollah will not move back into positions close to the border.
Meanwhile, Israeli military sources have indicated that the fighting could intensify.
BBC diplomatic correspondent Paul Adams says Israel would prefer a deal but it is publicly prepared to continue fighting if it does not get one.
Earlier, the UN deputy chief issued a warning over the observers' deaths in an Israeli strike on a UN base.
Mark Malloch-Brown said they had accepted Israel's apology, but still had "serious concerns" about what happened.
UN officials said they had contacted Israel a dozen times before the bombing and asked them to stop firing, which Israel did not.