The Iran-backed group Hezbollah in Lebanon said it responded to the Israeli strike, in which three girls aged between 10 and 14 were killed, by firing a barrage of grad rockets at the town of Kiryat Shmona in northern Israel.
Sunday's attacks marked the first time the group has announced using that particular weapon during four weeks of clashes at the border with Israeli forces, underlining the risks of escalation.
In a statement, Hezbollah said it would never tolerate attacks on civilians and its response would be "firm and strong."
"The enemy will pay the price for its crimes against civilians," Hezbollah lawmaker Hassan Fadlallah told Reuters.
Asked about earlier reports from security sources in Lebanon that an Israeli strike had killed three people in a car, an Israeli army spokesperson said the army would be releasing a statement later on Sunday about a strike in Lebanon.
Footage broadcast by television station al-Mayadeen showed rescue workers removing one of the casualties from the still-smoldering remains of the car.
Israel and Hezbollah have been exchanging fire across the frontier since the Palestinian militant group Hamas and Israel went to war on Oct. 7.
A report by the Lebanese security forces said the children and their grandmother were killed and their mother injured, when Israel targeted the car they were in as it drove between the villages of Aynata and Aitaroun.
Lebanon's caretaker Prime Minister Najib Mikati called it a heinous crime.
Foreign Minister Abdallah Bou Habib told Reuters Lebanon would submit a complaint to the United Nations over the killing of civilians, including children, in the attack.
Israel's military said an Israeli was killed on Sunday in an attack by Hezbollah over the border, without giving further details.
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