United Nations peacekeepers have contradicted Lebanese claims that Israeli forces were operating within Lebanese territory before a border flare-up which led to the deaths of four people.

The fighting has raised international concerns that Israel’s relationship with Lebanon could deteriorate, less than four years after a ceasefire was negotiated to end the Second Lebanon War with Hizbollah.

Lebanon claimed Israel had provoked the attack. But Israel said it was operating only inside its own borders, and noted that the fact there were Lebanese journalists at the scene suggested the skirmish had been premeditated.

And Milos Strugar, senior political adviser for the UN Interim Force in Lebanon (UNIFIL), said that Israel had been carrying out routine maintenance work "south of the international borderline," although on "the northern side of the border fence.”

Lebanese officials had claimed they only fired “warning shots” at the Israeli troops, but the IDF said its soldiers came under sniper shooting from across the border, and in response an Israeli tank opened fire.

The fighting left an Israeli commander, Dov Harari, dead, alongside two Lebanese soldiers and a journalist.

Another Israeli, Captain Ezra Lakiya, was seriously wounded in the attack and is being treated in hospital.

Mr Strugar said that UNIFIL had been informed of the work clearing clear woodland blocking the line of vision of Israeli soldiers stationed at the Galilee border.

He said details about the maintenance had been passed on to the Lebanese army.

Although UNIFIL had asked the IDF to postpone the maintenance work, Mr Strugar also said that UNIFIL deal with complaints of Lebanese provocations every day.

After the fighting an IDF spokesman warned of “consequences” if they were repeated and said “Israel holds the Lebanese government responsible for the grave incident that disrupted the calm in the region.”

Kadima MK Shaul Mofaz, a former defence minister, called it a "planned terror attack."

But, escalating the tension, the Hizbollah leader Sheikh Hassan Nasrallah said his militants would not "stand idle", despite the fighting being between the Lebanese army and Israel.

He told supporters: "The Israeli hand that targets the Lebanese army will be cut off." The militant group is believed to be building up missile stockpiles.

But Israel is not believed to have raised the northern Galilee region to high alert, suggesting security officials consider it unlikely to escalate further.

The UN Security Council met after the clash and called on both sides to strive to prevent any further escalation.

The clashes were the most serious at Israel’s northern border since the Second Lebanon War of summer 2006, which began after two Israeli soldiers were kidnapped by Hizbollah.