Mr Nasrallah threatened “surprises” after emerging unscathed following the air strikes on his home and office in Hezbollah’s stronghold in the southern suburbs of Beirut.
In other news, four Israeli servicemen were missing after the Shiite militant group Hezbollah attacked an Israeli warship off the Lebanese coast , either by a rocket or a pilotless drone, an Israeli military spokeswoman said today.
A foreign civilian vessel, believed to be Egyptian, was also hit and set ablaze during the attack, she added.
The Hizbollah chief said a rocket launched from the Shi’ite southern suburbs of Beirut hit an Israeli naval vessel patrolling offshore.
Meanwhile volleys of rockets were aimed at northern Israel, killing a grandmother and child.
Lebanon ‘cut off’
The conflict has left Lebanon virtually cut off from the outside world after Israel imposed an air and sea blockade, attacked the only international airport and bombed the main highway to neighbouring Syria.
Israel had earlier issued a direct threat against the Hezbollah chief after blaming the group’s main backers, Iran and Syria, over the crisis unleashed after Mr Nasrallah’s militants captured two Israeli soldiers on Wednesday.
“You wanted an open war, you will get an open war,” Mr Nasrallah said in a defiant audio message after the evening raid.
“It will be war at all levels… to Haifa, and beyond Haifa,” he said, referring to Israel’s third largest city which came under unprecedented rocket fire from Lebanon yesterday.
The international community has issued urgent appeals for calm and is sending envoys in a bid to avoid another full-scale Middle East war, with Israel criticised in some quarters for using “disproportionate force”.
Wave of strikes
In a wave of strikes yesterday, Israeli jets hit the main highway linking Beirut and Damascus and an airport hangar and fuel tanks, pounded Hezbollah’s command headquarters in Beirut and a Palestinian guerrilla base in eastern Lebanon, as well as bridges and other roads.
Three civilians were killed in attacks on Beirut’s southern suburbs,five civilians were killed in south Lebanon, while one woman was killed in a strike on a bridge near Sidon.
Over 100 raids were carried out, 78 of them in the south of the country.
The Israeli army said Hezbollah fired more than 100 rockets yesterday at a dozen towns in northern Israel.
The military has ordered about half a million Israelis in northern towns into bomb shelters.
The two Israelis killed yesterday has brought the toll over two days to four dead, while 50 have been wounded.
Israel warns Lebanon
Israeli Army chief Dan Halutz warned that Israel would continue to strike Hezbollah and other infrastructure targets in Lebanon.
“Lebanon is paying a very heavy price because of Hezbollah: bridges, roads and airports destroyed – and it could yet be deprived of other infrastructure,” he said.
In one of the strongest statements from a world leader on the conflict, President Jacques Chirac of France, the former colonial power in Lebanon, said Israel appeared to “wish to destroy” Lebanon.
Lebanon said US President George W Bush had called Prime Minister Fuad Siniora to voice support for his government and pledged to “exert pressure on Israel to limit damage inflicted on Lebanon”.
World powers are due to discuss the crisis at the Group of Eight meeting starting today in Moscow.
But Mr Bush, preparing to attend the summit, is not pressuring Israel to halt strikes on targets in Lebanon, his spokesman said.
“The president is not going to make military decisions for Israel,” Tony Snow said.
Captured soldiers still alive
The latest crisis was triggered when Hezbollah guerrillas seized two Israeli servicemen in a deadly attack on the volatile Lebanon-Israel border on Wednesday, leading to Israel’s first ground incursion since it withdrew in 2000.
The abduction came less than three weeks after a similar raid by Palestinian militants, including members of the ruling Islamist movement Hamas, on the Gaza border that resulted in the capture of an Israeli corporal.
All three captured Israeli soldiers were alive and in a “reasonable” state of health, the Israeli Army said.
Lebanese President Emile Lahoud called on Arab League ministers, due to meet today, to help avoid Israel’s “systematic destruction” of the country.
Security Council meets
Meanwhile the UN Security Council debated the violence in Lebanon in an emergency meeting yesterday but the session ended with no action on Beirut’s demand for an immediate end to Israeli air strikes on its territory.
The debate highlighted divisions in the Council, with the United States standing alone in refusing to even caution restraint from Israel over its military offensives in both Lebanon and Gaza.
US Ambassador to the UN Security Council, John Bolton, laid sole blame for the escalating violence in the region on Iran and Syria and their support for militant groups like Hezbollah and the armed wing of Hamas.