Three people were killed in Lebanon as tensions flared between Israeli forces and militant group Hezbollah, sparking fears of a full blown conflict between the two forces since their 2006 war.

The Israeli Defense Forces said two Israeli soldiers were killed when a Hezbollah missile attack hit an Israeli military convoy near the Shebaa Farms in Golan Heights.  Seven soldiers were left wounded.

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The United Nations also confirmed that one of its peacekeepers was killed in Southern Lebanon as Israeli soldiers responded with an airstrike and artillery fire.

Israeli military spokesman Peter Lerner said the attack by Hezbollah involved anti-tank missiles.

Israeli Prime Minister Benjamin Netanyahu warned that the attackers who killed the two Israeli soldiers will be held responsible and pay the full price.

Netanyahu said Israel is prepared to defend itself as it did in its offensive against Hamas in Gaza.

"I suggest that all those who are challenging us on our northern border, look at what happened in Gaza, not far from the city of Sderot," he said. "Hamas suffered the most serious blow since it was founded," Netanyahu added.

The United Nations had asked all parties to use "maximum restraint" to prevent an escalation of conflict.  The UN Security Council met in an emergency session to mitigate the situation following the deadly clash.

United Nations Ambassador Ron Prosor told the Security Council Wednesday that it will also defend itself at all costs.  Prosor  wrote a letter to U.N. Secretary-General Ban Ki-moon urging the 15-member council to "unequivocally and publically condemn Hezbollah".

The United States, a permanent council member, has condemned the attack, branding it an "an act of violence". 

"We urge all parties to refrain from any action that could escalate the situation," State Department spokeswoman Jen Psaki said. 

Hezbollah had said its attack against the Israeli convoy Wednesday was in retaliation for an airstrike earlier this month in Syria.  That attack that killed six Hezbollah members is believed to have been carried out by Israel.

TagsIsrael, Hezbollah, Golan Heights