There were unconfirmed reports that five Israelis had been injured in the blasts. Experts said at least three katyusha rockets landed in Israel.
The attack raised fears of the conflict spreading and the very dramatic prospect of a northern front being opened up in Israel while its armed forces are still heavily engaged in the south of the country on operation Cast Lead, the assault on Gaza.
Katyushas have been fired into Israel by Hizbollah, the militant Shia group in southern Lebanon, and militants connected to the large Palestinian refugee population in Lebanon, The Telegraph reported.
Israeli planners were this morning anxiously trying to work out who might have been responsible for the katyusha strikes.
Two weeks ago Lebanese security forces said they had found rockets in the south of the country aimed at Israel and set to be fired by automatic timer.
The assessment then was they were the work of Palestinian militants and not Hizbollah.
If Hizbollah does start an assault on Israel in support of Hamas militants in Gaza then the level of conflict seen over the last 13 days since operation Case Lead began could escalate dramatically.
Heavy Israeli airstrikes on Hizbollah positions in southern Lebanon could be expected.
Israel and Hizbollah fought a brutal 34-day conflict in 2006, which killed around 1,000 Lebanese and 140 Israelis.
As Israeli experts tried to assess the developments in the north, the Israeli air force carried out heavy overnight bombing of Gaza's southern border with Egypt hoping to disrupt the smuggling tunnels dug in the sandy soil.
The Egyptian border at the town of Rafah has become the focus of diplomatic attempts to end the Gaza conflict. (ANI)