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Israel said today it wanted to open "direct, bilateral" peace talks with Lebanon, as officials confirmed they have agreed a ceasefire with the Palestinian Islamist group Hamas due to begin in the Gaza Strip from dawn tomorrow.

The talks with Lebanon would include discussions over the Shebaa Farms, an area of land held by Israel and claimed by the Lebanese.

The overture appears to have been encouraged by the US administration and comes after indirect talks between Israel and Syria were re-started for the first time in eight years.

The approach to Lebanon may indicate that an agreement is close at hand with the Lebanese group Hizbullah over the return of two Israeli soldiers captured at the start of the 2006 Lebanon war and who are now feared dead. Israel is reportedly ready to release some Lebanese prisoners in return.

Today Israeli officials were cautious about how long the Gaza ceasefire might last, warning that the agreement was fragile and a military invasion still an option.

Amos Gilad, a senior Israeli defence official who was the envoy on the ceasefire negotiations, said: "This is not a peace agreement."

"A calm means that there is no type of terror, there is no difference if it comes from 'a' or 'b,"' he told Israel's Army Radio. "It's clear that if there won't be attacks on us, the army activity will be in accordance."

Palestinian militants fired rockets and mortars into southern Israel today and there was gunfire towards Israeli communities, but there were no reports of injuries.

Islamic Jihad said it carried out the attacks in response to the killing of 10 militants in Gaza this week.

"Thursday will be the beginning we hope of a new reality where Israeli citizens in the south will no longer be on the receiving end of continuous rocket attacks," said Mark Regev, a spokesman for the Israeli prime minister. "Israel is giving a serious chance to this Egyptian initiative and we want it to succeed."

Others, even in the Israeli cabinet, spoke out against the decision to accept the ceasefire, which has been arranged after weeks of mediation by the Egyptians.

"A calm brings a great accomplishment for Hamas," Meir Sheetrit, an Israeli cabinet minister, told Army Radio. "They prove that their determination and the war and the continued attacks on Israel help them achieve what they want."

The ceasefire will develop in stages, with Israel gradually easing its economic blockade of Gaza if the ceasefire holds.

Funerals were held in Gaza today for militants killed in an Israeli air strike yesterday, among them Moataz Dogmush, a senior leader in the Army of Islam.

The small but extreme militant group was responsible last year for kidnapping the British BBC reporter Alan Johnston and also played a role in the capture in June 2006 of the Israeli soldier Gilad Shalit, who remains in captivity in Gaza.

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