Halutz elaborated on a number of accomplishments in southern Lebanon, including damage caused to Hezbollah infrastructures.

Halutz was quoted as telling the cabinet that "we intend to investigate everything that happened in the war, from the chief of staff down to the last soldier. We have nothing to hide."

Halutz has been under mounting pressure for the way he dealt with the war. After revelations that he sold off his stock portfolio shortly after Hezbollah launched a cross-border attack on July 12, there were many calls for his resignation.

At the cabinet meeting, Foreign Minister Tzipi Livni briefed the ministers on what is taking place in the international arena in terms of the Lebanese issue and her recent meeting with UN chief Kofi Annan.

Livni said that she had warned Annan that the failure to release two soldiers captured by Hezbollah constituted violation of a ceasefire agreement, in addition to continued smuggling of arms to Hezbollah through Syria.

Some cabinet ministers supported the establishment of an official investigation committee into what they termed as failures of the war in Lebanon.

Prime Minister Ehud Olmert announced Sunday morning that the government would approve the establishment of a cabinet to rehabilitate the north, which will be headed by him.

"This is a first-rate national mission," he said.