Israeli Prime Minister Ehud Olmert on Wednesday called the Lebanese Hizbollah's attack on the northern Israeli border "an act of war."

"It is an act of war by the state of Lebanon against the state of Israel in its sovereign territory," Olmert said at a news conference.

"We are already responding with great strength ... The cabinet will convene tonight to decide on a further military response by the Israel Defense Forces," he added.

The Israeli prime minister also vowed a "very painful and far-reaching" response, adding that Israel would not negotiate over the fate of two soldiers who went missing during the border violence.

Earlier, Hizbollah claimed that it had kidnapped two Israeli soldiers, demanding Israel release prisoners held in Israeli jails in exchange for the two soldiers.