Israeli ground troops clashed with Hezbollah guerrillas along the Israel-Lebanese border while Israel's air force continued bombing targets in Lebanon, killing 72 Lebanese in a single day.
Wednesday's toll in Israeli air raids was the highest since the fighting began.
The European Union joined in efforts to mediate an end to the crisis.
Twenty-five Lebanese civilians were killed and 26 others wounded in raids on the village of Sreifa, about 30 km from the southern port city of Tyre, where 10 houses were destroyed.
The bodies of two Egyptian workers were retrieved from under the rubble of a commercial centre destroyed in an Israeli air raid on Ghazieh, south of the coastal city of Sidon. Five other civilians including an Egyptian, were wounded.
In the late night raids, Israeli jets targeted Hezbollah's "security perimeter" in Beirut's mainly Shiite southern suburbs.
The zone, where the group once maintained its headquarters, has been flattened in previous raids in the past week.
The raids also targeted a bridge in Akkar, in northern Lebanon, near the Syrian border. At least two Lebanese civilians were wounded.
Two Israeli soldiers and a Hezbollah militant were also killed in the fighting along the border, in the heaviest ground fighting in the one-week-old Israel-Lebanon crisis.
The clashes broke out after Israeli troops crossed into Lebanon to demolish a Hezbollah outpost.
The latest deaths brought to more than 300 the number of Lebanese killed by the more than 1,000 Israelis raids launched since the assault began on July 12.
The vast majority of the dead were civilians. More than 1,000 have been injured.
At least 15 Israeli civilians have also been killed, and around 350 wounded, by more than 900 missiles launched by Hezbollah at northern Israel.
In addition, a total of 14 Israeli soldiers have been killed since the crisis erupted on Wednesday last week with the abduction by Hezbollah of two Israeli soldiers patrolling along the border.
Lebanese Prime Minister Fouad Seniora, in a speech delivered in English before foreign ambassadors, appealed for an immediate halt to Israel's offensive and for urgent humanitarian international aid.
"I call upon you to respond immediately without reservation or hesitation to this appeal for an immediate ceasefire and provide urgent international humanitarian assistance to our war- stricken country," he pleaded.
"Let me assure you we shall spare no avenue to make Israel compensate the Lebanese people for the barbaric destruction it has inflicted," he said, adding angrily: "Is this what the international community calls self-defence?"
Confirming the Lebanese death and injury toll, Seniora said it had reached tragic proportions: "Over 1,000 injured and 300 killed so far, over half a million people have been displaced in some areas, the hospitals have been crippled ... there are shortages of food and medical supplies."
But in a morning meeting, Israeli Prime Minister Ehud Olmert's security cabinet decided to continue with the aerial offensive until three conditions for a truce were met.
"Hezbollah must free the two abducted soldiers without conditions, the Shiite militant movement must stop its barrage of rocket attacks against Israel, and Lebanon must implement United Nations Security Council Resolution 1559," a statement issued by the forum of senior Israeli ministers said.
The resolution calls on the Lebanese government to assert its sovereignty over southern Lebanon and deploy the Lebanese army along the border in Hezbollah's stead.
Israeli Foreign Minister Tzipi Livni reiterated the conditions in a news conference with European Union foreign policy chief Javier Solana, who arrived in Jerusalem to put his weight behind efforts to find a diplomatic solution to the worst crisis between the two neighbouring nations in more than two decades.