The death toll from an Israeli airstrike on a Beirut suburb rose to 31, including seven women and three children, Lebanon's health minister said on Saturday, as Israel and Hezbollah traded fire.

Firass Abiad told reporters 68 people were also wounded of whom 15 remained in hospital, adding that search and rescue operations were still ongoing, with the number of casualties likely to rise.

The rare strike hit an apartment block in a densely populated southern Beirut neighbourhood on Friday afternoon during rush hour as people returned home. It was the deadliest strike targeting the Lebanese capital since the 2006 Israel-Hezbollah war.

Among those killed were Ibrahim Aqil, who was in charge of Hezbollah's elite Radwan Force, and Ahmed Wahbi, another senior commander in the group's military wing.

Wahbi was described as a commander who played major roles within the group for decades and was imprisoned in an Israeli jail in south Lebanon in 1984. Hezbollah said he was one of the “field commanders” of a 1997 ambush in southern Lebanon that left 12 Israeli troops dead.

Hezbollah announced overnight on Friday that 15 of its operatives were killed by Israeli forces, but did not elaborate on the location of these deaths. Meanwhile, the Israeli army spokesperson, Lt Col Nadav Shoshani, said on Saturday a total of 16 Hezbollah fighters were killed in the strike.

Israel earlier said Aqil had been meeting with other militants in the basement of the apartment block.

Lebanese troops cordoned off the area preventing people from reaching the building that was knocked down as members of the Lebanese Red Cross stood nearby to take any recovered bodies from under the rubble. On Saturday morning, Hezbollah’s media office took journalists on a tour of the scene of the airstrike where workers were still digging through the rubble.

The Minister of Public Works and Transport Ali Hamie told reporters at the scene that 23 people are still missing.

The airstrike on the crowded Qaim street knocked out an eight-story building that had 16 apartments and damaged another one adjacent to it.

The missiles destroyed the building and cut through the basement where the meeting of Hezbollah officials was allegedly being held. (AP)