The Israeli military disputed the Al-Arabiya television report of 12 Israeli soldiers killed at Bint Jbail, saying only that several soldiers have been wounded in heavy fighting. Military sources told Ynet, an Israeli news Web site, there are 13 Israeli casualties.
Four U.N. observers, meanwhile, were killed when their bunker was hit by an Israeli air strike and collapsed, reports CBS News correspondent Sharyn Alfonsi.
Talks in Rome among senior officials from the United States, Europe and several Arab nations bogged down, in apparent disagreement over what kind of cease-fire would be urged to end the Israeli-Hezbollah fighting. Although officials called for an end to the violence, U.S. Secretary of State Condoleezza Rice said any cease-fire must be "sustainable" and that there could be "no return to the status quo ante."
In other developments:
Bint Jbail is often called the capital of Hezbollah and is strategic because it controls the high ground, reports .
The Israeli air strike on a U.N. observation post in southern Lebanon that killed four unarmed U.N. observers also is likely to further fuel international demands for an immediate cease-fire.
United Nations Secretary General Kofi Annan said the attack late Tuesday was "apparently deliberate" and demanded an investigation. Israeli Prime Minister Ehud Olmert called Annan on Wednesday to express his "deep regret over the mistaken killing," Olmert's office said.
Berger in Haifa reports Israelis are outraged at Annan's charge.
Annan called for the formation of a multinational force to help Lebanon assert its authority and implement UN resolutions which would leave Hezbollah disarmed.
"There is much work to do and everyone has a role to play," said Rice.
Israel was not represented at the conference, which initially was set up to discuss economic aid for Lebanon.
Israel's foreign minister Tzipi Livni said she expects the international community to stand by Israel in stopping Hezbollah rocket attacks.
"We will not do with declarations," Livni said while visiting Haifa. "U.N. Resolution 1559 must be applied, and Hezbollah disarmed and expelled from Lebanon."
The meeting comes as the violence threatens to spiral further. Over the past day, ground fighting intensified, Hezbollah's leader threatened to strike deeper into Israel, and Iran's president, Mahmoud Ahmadinejad, warned the conflict could trigger "a hurricane" of broader fighting in the Middle East.
Israeli Prime Minister Ehud Olmert said Wednesday Israel plans to create a one-mile-wide zone in southern Lebanon free of Hezbollah guerrillas.
Olmert also told a parliament committee Wednesday that Israel will not reoccupy any part of southern Lebanon, participants said, apparently to reassure lawmakers and the public that troops will not return to Lebanon permanently.