Authorities in the city of Haifa in northern Israel have shut down the harbour following rocket attacks by Hezbollah.
A number of cities were hit including Nahariya where one person was killed.
As Israel’s third largest city, Haifa plays a vital role in the transport of goods – many imports have been temporarily rerouted to the port of Ashdod.
Plumes of smoke could be seen rising from a railway depot which was also targeted by the guerrillas, but police say there were no casualties.
Many had spent the night in air raid shelters, after eight people were killed in rocket attacks by Hezbollah on Sunday.
Around a million Israelis in the north of the country have either been forced into shelters or have fled southwards.
According to opinion polls, up to 86 per cent of Israelis believe their army’s offensive against Lebanon is justified.