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An Israel Air Force strike hit a crowded area in Beirut's southern suburb Monday, destroying a residential building and killing one and wounding at least 20, security sources said.

They said IAF missiles hit the Shiyyah neighbourhood that has been spared in the bombardment so far.

One hospital received one dead and two wounded while another hospital received 20 wounded as rescue workers began looking for possible casualties under the rubble, witnesses said.

Earlier Monday, Lebanese Prime Minister Fouad Siniora reversed his previous claim that 40 people had been killed in an IAF strike on a southern Lebanon village earlier in the day, saying that there was at least one person dead.

"The massacre in Houla, it turned out that there was one person killed," Siniora told reporters. "They thought that the whole building smashed on the heads of about 40 people... thank God they have been saved."

Rescuers said that some 50 people had been found alive in a shelter under the ruins of a bombed building in the border village of Houla.

A senior Lebanese security official said earlier that about 30 people had been trapped in the rubble after and it was not clear how many were dead.

Lebanese security sources said IAF bombing destroyed several houses in the village.

The Lebanese sources said aircraft first destroyed a house where 17 people were hiding in the village. Other strikes a short time later hit two nearby houses where about 30 other people were staying.

Siniora had claimed that more than 40 people had been killed in the strike.

"An hour ago, a horrific massacre took place in Houla village as a result of the intentional Israeli bombardment that resulted in more than 40 martyrs," Siniora told an Arab foreign ministers meeting in Beirut.

A resident of the village told Al-Jazeera television that houses in the center of the village had been bombed. He said that shepherds lived in the houses, and that shepherds and members of their families had been killed.

"They're bombing everything that moves," the villager said of Israeli aircraft flying over the village. Yesterday, they even bombed a donkey that entered the area."

Security sources said rescue workers were unable to reach the scene immediately because of continued Israeli bombardment in the area. The Red Cross later appealed for bulldozers to clear roads so they could reach the village.

United Nations peacekeepers at a post near Houla reported Hezbollah fired rockets toward Israel twice Monday from positions near the UNIFIL base.

Earlier in the day, Hizbollah fighters had attacked Israeli forces near the village, wounding five soldiers.