Chief of Staff Dan Halutz was meeting with senior Israel Defense Forces officials Friday morning to decide whether to lower the alert in the rocket-riddled north of the country, whose residents spent the night in bomb shelters, Israel Radio reported.

Following a Thursday night rocket attack on Haifa, the IDF Home Front Command ordered residents of Haifa, Haifa's northern Krayot suburbs, Acre, Tirat Hacarmel and Nesher to stay in shelters or bomb-safe rooms and listen to radios. Nahariya residents have also been instructed to remain in shelters.

Two Israelis were killed by rocket fire in the north of the country Thursday, one in Nahariya and one in Safed. Some 120 were wounded when scores of Katyusha rockets fired by Hezbollah rained down across northern Israel.

Israeli Ambassador to the U.S. Daniel Ayalon told reporters in Washington that Thursday's rocket attack on Haifa was a "major, major escalation" by Hezbollah.

There were no casualties when the rocket hit the Stella Maris area near French Carmel. Hezbollah denied firing the rocket at Haifa.

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In the south of the country, five Qassam rockets hit the Sderot area early Friday, sending four people into shock, damaging a building and causing a fire.

Rockets target Nahariya, Safed The woman killed by rocket fire in the northern coastal town of Nahariya was identified as Monica Zeidman (Lehrer), 40. She died in her home. The attack also wounded 29 people, including a number of children. Most of the casualties were lightly hurt; one person sustained serious wounds.

Hezbollah renewed its bombardment of Nahariya on Thursday evening. Some of the rockets hit a group of journalists working in Nahariya, wounding at least one person.

A barrage of Katyusha rockets hit Safed on Thursday, in two separate attacks. One person was killed and about 20 wounded. Four of the wounded were in serious condition, including two children.

The rocket fire began in the early hours of Thursday, after Israel Air Force jets struck targets across Lebanon following cross-border attacks by Hezbollah during which eight Israel Defense Forces soldiers were killed and two others abducted.

Rockets also fell in the town of Carmiel, but there were no injuries. In the nearby village of Majdal Qrum, one person was moderately hurt by a rocket.

A resident of the northern town of Zirit was also lightly wounded by a Katyusha on Thursday.

The Israel Defense Forces confirmed that several rockets landed some 15 kilometers south of the border with Lebanon on Thursday morning, signalling that Hezbollah is becoming increasingly successful in expanding the reach of the crude projectiles. This is the furthest that Hezbollah rockets have managed to penetrate inside Israel.

Hezbollah has declared it has more than 10,000 rockets to use against Israel.

The government is working on the assumption that Hezbollah will use rockets with a longer range than they have previously had to strike civilians areas in Israel. Should that happen, the IDF will then consider sending ground troops into Lebanon.