BEIRUT, Lebanon (AP) – Hezbollah fighters dealt Israel its heaviest losses in the Lebanon campaign, killing eight soldiers in an ambush during fierce battles over a key hilltop town. Faced with surprisingly tough resistance, an Israeli general said the operation against the guerrillas could last weeks.

With its offensive entering its third week, Israel now says it intends only to establish a two-kilometre security strip along the border, ruling out a wider occupation of the south.

Israel sought to show it had an endgame in an offensive in which it was becoming more and more clear how difficult it would be to reach its goal – once and for all eliminate Hezbollah from its border. Fifteen days of heavy bombardment of Lebanon has failed to stop guerrilla rocket fire, even while killing hundreds, driving up to 750,000 people from their homes and causing billions of dollars in damage.

Hezbollah guerrillas fired another large barrage into northern Israel yesterday – 119 rockets that wounded at least 31 people and damaged property.

Pushing Hezbollah back with ground troops was also proving to be bloody. Several thousand troops are across the border, Israeli military officials said – mainly in a tiny pocket about 25-square kilometres (six square miles) around the town of Bint Jbail, where yesterday’s ambush took place.

The Hezbollah fighters are heavily outnumbered, with around 100 in Bint Jbail and several hundred more in surrounding fields, bunkers and caves, according to the officials. But they use classic guerrilla tactics, choosing when to strike in the hilly territory they know well. They are dug in with extensive tunnel networks and stockpiling weapons, including rockets with which they pelted Israeli forces in yesterday’s fighting.

Violence was also increasing on the other front of Israel’s fight on Islamic militants: Gaza, where Hamas-linked militants are holding an Israeli soldier seized a month ago. A force of 50 tanks and bulldozers entered the northern Gaza Strip to battle Hamas gunmen. Israeli air and artillery attacks killed 18 Palestinians, including at least 14 gunmen and three little girls.

Israel was feeling pressure on the international front – and anger over a bombing Tuesday night that directly hit a UN observation post on the border, killing at least three peacekeepers. Rescue crews were still digging through the rubble yesterday for a fourth believed dead.

In Rome, US, European and Arab officials holding crisis talks on Lebanon failed to agree on details for a cease-fire. US Secretary of State Condoleezza Rice resisted pressure from allies for Washington to change its stance and call for an immediate halt to the violence.

Rice insisted any cease-fire must be “sustainable” and that there could be “no return to the status quo” – a reference to the US and Israeli stance that Hezbollah must first be pushed back from the border and the Lebanese army backed by international forces deployed in the south.

The chief of Israel’s northern command warned that the fight would drag on.

“I assume it will continue for several more weeks, and in a number of weeks we will be able to (declare) a victory,” Major General Udi Adam told a news conference as his troops battled guerrillas in the border town of Bint Jbail, a key Hezbollah stronghold.

While the ground battle was intensifying, the bombardment in the rest of Lebanon appeared to be easing.

Around 24 airstrikes were reported outside the immediate border region yesterday, down from nearly 30 a day recently. One hit in the centre of the southern port of Tyre collapsed the top floor and ripped the facade off an empty seven-story building where Hezbollah’s top commander in the south has offices. The strike wounded 13 people – including six children – nearby.

The deaths in Bint Jbail brought to 50 the number of Israelis killed in the campaign, including 32 members of the military, according to the military.

In Lebanon, at least 423 people have been killed – including 376 civilians reported by the Health Ministry and security officials, 20 Lebanese soldiers and 27 fighters Hezbollah has acknowledged were killed. Israel says more than 100 guerrillas have been killed.

About 100 foreigners – mostly Americans – who had been visiting family homes in Yaroun – only a few kilometres from Bint Jbail – fled to the port city of Tyre and said their village had been ravaged by bombardment.

Meanwhile, UN Secretary-General Kofi Annan has called for the formation of a multinational force to help Lebanon assert its authority and implement U.N. resolutions that would disarm Hezbollah.