Israel's Cabinet on Sunday approved the UN ceasefire deal, paving way for an end to its 32-day long offensive against Lebanon.
The Israeli Cabinet approved the deal by a 24-0 vote, with one abstention, a government official said.
The UN resolution had already been approved by the Lebanese government on Saturday and the Hezbollah had agreed to abide by its provisions.
Prime Minister Ehud Olmert, who spoke at the meeting, said the resolution was 'good' for Israel.
"UN Security Council resolution 1701 is a good resolution that creates true conditions to implement UNSCR 1559 and prevent a return to the status quo," he said.
"Hezbollah won't continue to be a state-within-a-state inside Lebanon and the Lebanese government will become the point of contact for the Israeli government," Olmert told his ministers.
Defence Minister Amir Peretz backed the Prime Minister saying his "management of the war was excellent and sufficiently aggressive".
"His collaboration with me was precise," Ynetnews quoted him as having said.
Foreign Minister Tzipi Livni also expressed support for the UN resolution saying it could not have been achieved militarily.
"No army can implement Security Council resolution demands by military means," she said.
"The question that we must ask ourselves today is where we were prior to the outbreak of conflict, when UNSC resolution 1559 had not been implemented, when Lebanese armed forces were not deployed in the south and when there was not an embargo on Hezbollah."
The foreign minister said the empowerment of Lebanese Prime Minister Fouad Siniora serves Israeli interests. "Empowering Siniora does not conflict with Israeli interests, but rather the contrary," she said.