After news of the deaths emerged, Rice telephoned Lebanese Prime Minister Fuad Saniora and said she would stay in Jerusalem to continue work on a peace package, rather than make a planned visit to Beirut on Sunday. Saniora said he told her not to come.

British Prime Minister Tony Blair, who earlier supported the US stance, said Washington must work faster to put together the broader deal it seeks.

But Saniora said talk of a larger peace package must wait until the firing stops.

"We will not negotiate until the Israeli war stops shedding the blood of innocent people," he told a gathering of foreign diplomats. But he underlined that Lebanon stands by ideas for disarming Hezbollah that it put forward earlier this week and that Rice praised.

He took a tough line and hinted that any Hezbollah response to the airstrike at the village of Qana was justified.

"As long as the aggression continues there is response to be exercised," he said, praising Hezbollah's leader Sheik Hassan Nasrallah for his "sacrifices."

Lebanon demanded an international probe.

Hezbollah said on its Al-Manar television that it will retaliate, vowing, "The massacre at Qana will not go unanswered." It hit northern Israel on Sunday with 157 rockets - the highest one-day total during the offensive - with one Israeli moderately wounded and 12 others lightly hurt, medics said.

Iraq's top Shiite cleric, Grand Ayatollah Ali al-Sistani, demanded an immediate cease-fire in Lebanon, warning the Muslim world will "not forgive" nations that stand in the way of stopping the fighting.

Lebanese anger was heightened by memories of a 1996 Israeli artillery bombardment that hit a UN base in Qana, killing more than 100 Lebanese who had taken refuge from fighting. That attack sparked an international outcry that forced a halt to an Israeli offensive.

In Beirut, some 5,000 protesters gathered downtown, at one point attacking a UN building and burning American flags. They shouted "Destroy Tel Aviv!" and chanted for Hezbollah's ally Syria to hit Israel.

In the Gaza Strip, Palestinians stormed a UN compound and smashed its windows Sunday during a protest against Israeli airstrikes. Security officials fired into the air to disperse them.

Images of children's bodies tangled in the building's ruins, being carried away on blankets or wrapped in plastic sheeting were aired on Arab news networks.

In Qana, Khalil Shalhoub was helping pull out the dead until he saw his brother's body taken out on a stretcher.

"Why are they killing us? What have we done?" he screamed.

Israel said Hezbollah had fired more than 40 rockets from Qana before the airstrike, including several from near the building that was bombed.

At a news conference in Tel Aviv Sunday night, military officers showed aerial footage taken two days ago of Katyusha rockets being fired near houses in Qana, and of a Katyusha launcher firing missiles and then being driven into Qana and hidden inside a house.

Foreign Ministry official Gideon Meir accused Hezbollah of "using their own civilian population as human shields."

Israel said residents of Qana had been warned to leave. But Shalhoub and others in the village said residents were too terrified to take the road out of the village.

More than 750,000 Lebanese have fled their homes in the fighting. But many thousands more are still believed holed up in the south, taking refuge in schools, hospitals or basements of apartment buildings amid the fighting ¡ª many of them too afraid to flee.

Lebanese Defense Minister Elias Murr disputed allegations that Hezbollah was firing missiles from Qana.

"What do you expect Israel to say? Will it say that it killed 40 children and women?" he told Al-Jazeera television.

Before dawn Sunday, Israeli ground forces backed by heavy artillery fire crossed the border and clashed with Hezbollah guerrillas in the Taibeh Project area, about two miles inside Lebanon. Hezbollah said two of its fighters were killed. Eight Israeli soldiers were wounded.

Some 460 Lebanese, mostly civilians, had been killed in the campaign through Saturday, according to the Health Ministry - before the attacks on Qana. Thirty-three Israeli soldiers have died, and Hezbollah rocket attacks on Israel have killed 18 civilians, Israel said.