Returning soldiers padlocked the border gate at Zarit, close to where Iranian-supported Hezbollah fighters seized two Israeli soldiers on July 12 before the conflict with US ally Israel erupted sending shockwaves across the Middle East.

Israel sent 10,000 troops into south Lebanon before a truce took hold on August 14. A few dozen remained by the weekend and Israel wanted them out before Yom Kippur, the holiest day in the Jewish calendar, which starts at dusk on Sunday.

A Lebanese official said the government was waiting for United Nations peacekeepers to verify the withdrawal before commenting.

A Lebanese military source said the commander of the UN Interim Force in Lebanon (Unifil) was due to meet Lebanese and Israeli officials on the border soon to verify the withdrawal.

The headlights of tanks lit up clouds of dust as they crossed back into Israel past coils of barbed wire. Returning soldiers whipped out mobile phones to call home.

Israel's army chief, Major-General Dan Halutz, said that all troops had quit Lebanon except for some who would remain on the Lebanese side of the divided border village of Ghajar until security arrangements were finalized.

But Halutz cautioned in an interview with Israel Radio that Israel would take further action in Lebanon if Hezbollah moved back to the frontier zone.

"If armed Hezbollah men move to the border, and try to reestablish their infrastructure, we will act to prevent it," Halutz said.

Around 1,200 Lebanese, mostly civilians, and 157 Israelis, mostly soldiers, were killed in the fighting -- the worst since Israel's 1982 invasion.

The war overshadowed an Israeli offensive in Gaza launched after the June 25 capture of a soldier in a cross-border raid. Halutz said Israel is considering intensifying strikes in Gaza by "more continued and deeper ground action."

Although the war in Lebanon had widespread support in Israel, support for Prime Minister Ehud Olmert has since tumbled because of the army's failure to crush Hezbollah.

Halutz himself aimed unusual criticism at his own troops, saying "the result in Lebanon is mediocre." Asked whether he had thought to resign, Halutz said "the thought has crossed my mind more than once," though he had decided to remain.

Hezbollah hailed the war as a victory over the Middle East's mightiest army, boosting the group's leader Sayyed Hassan Nasrallah.

UN Resolution 1701, which ended the war, authorises up to 15,000 UNIFIL troops to join a similar number of Lebanese army troops in the south, with a demilitarised zone south of the Litani River.

Hezbollah has rejected international calls for it to disarm.

Israel did not rule out continued overflights of Lebanese territory if the resolution was not enforced.

"No one should expect that Israel is obliged to honour its commitments if the other parties to 1701 are ignoring theirs," said Israeli Foreign Ministry spokesman Mark Regev.

While Israel sees the deployment of Lebanese troops and a beefed up UN force to southern Lebanon as a success, it did not achieve its aims of recovering the captured soldiers or preventing Hezbollah from firing barrages of rockets.

An Israeli cabinet minister said on Saturday Israel should assassinate Nasrallah if an opportunity arose to do so without causing a large number of bystander casualties.