JERUSALEM/BEIRUT Israel wants to hurt Hezbollah but not drag the Middle East into all-out war, two Israeli officials said on Monday, as Lebanon braced for retaliation after a rocket strike that killed 12 children and teens in the Israeli-occupied Golan Heights.

Two other Israeli officials said Israel was preparing for the possibility of a few days of fighting following Sunday's rocket strike at a sports field in a Druze village.

All four officials, who included a senior defence official and a diplomatic source, spoke on condition of anonymity and gave no further information about Israel's plans for retaliation.

"The estimation is that the response will not lead to an all-out war," said the diplomatic source. "That would not be in our interest at this point."

Israel and the US have blamed Lebanon's Hezbollah for the strike. Hezbollah has denied any role.

The incident has added to concerns that months of cross-border hostilities between Israel and the heavily armed Iran-backed Lebanese militant group could spiral into broader, more destructive war.

Late on Sunday, Israel's security cabinet authorised Prime Minister Benjamin Netanyahu and Defence Minister Yoav Gallant to decide on the "manner and timing" of a response to the rocket strike.

Israel's largest newspaper, Yedioth Ahronoth, quoted unidentified officials as saying the response would be "limited but significant".

The report said options for retaliation ranged from a limited but "photogenic" attack on infrastructure, including bridges, power plants and ports, to hitting Hezbollah weapons depots or targeting high-level Hezbollah commanders.

Prompted by the Gaza war, the hostilities between Israel and Hezbollah have been their worst since they went to war in 2006.

Hezbollah, an ally of the Palestinian group Hamas, has said its campaign of rocket and drone attacks on Israel has aimed to support the Palestinians, and indicated it will only cease fire when Israel's offensive on Gaza stops.

The conflict at the Israel-Lebanon border has forced tens of thousands of people to leave their homes on both sides of the frontier.

US Secretary of State Antony Blinken, in a phone call with Israeli President Isaac Herzog on Monday, emphasized the importance of preventing escalation of the conflict, US State Department spokesperson Matthew Miller said.

They discussed efforts to reach a diplomatic solution to allow citizens on both sides of the border between Israel and Lebanon to return home, and ongoing efforts to achieve a ceasefire in Gaza and the release of hostages held there.

On Monday, an Israeli drone strike killed two people and wounded three more in southern Lebanon, the Lebanese civil defence said. They were the first fatalities in Lebanon since Saturday's incident.

An official in the Lebanese civil defence told Reuters the wounded included an infant, without saying whether the dead were fighters or civilians.

The Israeli military said its air defences downed a drone which crossed from Lebanon into the area of Western Galilee on Monday.

Flights at Beirut's international airport have been cancelled or delayed as airlines responded to the possibility of an Israeli response.

Both Israel and Hezbollah have appeared at pains to avoid a full-scale war since they began trading blows in October.

Hezbollah has denied firing the rocket that killed the youngsters. It said in a statement circulated early on Saturday evening it had fired a missile against a military target on the Golan Heights, a border area Israel seized from Syria after the 1967 Middle East war and has since annexed in a move not generally recognised internationally.

  - Reuters