US officials believe Israel has narrowed down targets in its potential response to Iran's recent attack to military and energy infrastructure, NBC reports.

The Middle East remains on high alert for further escalation in a year of war as Israel battles Iran-backed groups Hezbollah in Lebanon and Hamas in Gaza.

Tehran, a major oil producer, has threatened Israel with severe consequences if the Islamic Republic is attacked.

(Israel's military says it is dismantling Hezbollah infrastructure in southern Lebanon. (AP PHOTO)

Israel has repeatedly said it will respond to Iran's missile barrage on October 1, which was launched in retaliation for Israel's military operations in Gaza and Lebanon and the killings of a string of Hamas and Hezbollah leaders.

There is no indication that Israel will target nuclear facilities or carry out assassinations, the NBC report said, citing unnamed US officials and adding that Israel has not made final decisions about how and when to act.

According to the report, US and Israeli officials said a response could occur during the current Yom Kippur holiday.

Israeli officials have not publicly commented on the report.

The conflict between Israel and Hezbollah militants erupted a year ago when Hezbollah began launching rockets at northern Israel at the start of the Gaza war, and has sharply escalated in recent weeks.

Israel's military said it continues to operate in southern Lebanon to dismantle Hezbollah infrastructure.

"Over the past day, the IAF (air force) has struck approximately 200 Hezbollah targets deep in Lebanon and southern Lebanon, including terrorist cells, launchers, anti-tank missile posts, and terrorist infrastructure sites," it said.

(Israel's operation has displaced more than 1.2 million people, according to Lebanon's government. (AP PHOTO)

Israel also said five launches that crossed from Lebanon were intercepted by the air force.

The Israeli military added in a statement on Sunday that one of its reservists and an officer were severely injured in two separate incidents during combat in southern Lebanon, with additional soldiers suffering light to moderate injuries.

The Israeli military also said it captured a Hezbollah militant in southern Lebanon after discovering an underground tunnel leading to a hideout, where an area with weapons and supplies for extended use was found.

Hezbollah announced a rocket strike on the Tirat HaCarmel transport base in southern Haifa, in a statement on Sunday.

Israel has intensified its military operations in recent weeks, bombing southern Lebanon, Beirut's southern suburbs and the Bekaa Valley, killing many of Hezbollah's top leaders, and sending ground troops across the border.

Hezbollah for its part has fired rockets deeper into Israel.

Israel's expanded operation has displaced more than 1.2 million people, according to Lebanon's government, which says more than 2100 people have been killed and 10,000 wounded in more than a year of fighting.

The toll does not distinguish between civilians and combatants but includes scores of women and children.

US Defense Secretary Lloyd Austin, in a call with Israeli Defence Minister Yoav Gallant on Saturday, expressed "deep concern" about reports that Israeli forces had fired on United Nations peacekeeping positions in Lebanon in recent days and urged Israel to ensure safety for them and the Lebanese military, the Pentagon said.

Five peacekeepers have been injured in three separate incidents since Thursday, peacekeeping mission the UN Interim Force in Lebanon (UNIFIL) has said.

The fighting in the region which includes all of Tehran's allied militant groups - Hezbollah, Yemen's Houthis and armed groups in Iraq - has raised fears that the US and Iran will be sucked into a full-scale conflict in the oil-producing Middle East.

The Islamic Resistance in Iraq said in a statement on Sunday it had targeted a military site in the Israeli-occupied Golan Heights with drones as part of its support of the Palestinian people and Lebanon. 

It said it would continue escalating attacks against Israeli strongholds.

The war in Gaza began after a Hamas-led assault on October 7, 2023, on southern Israeli communities in which 1200 people were killed and about 250 were taken hostage, according to Israeli tallies.

Israel's military campaign in Gaza, aimed at eliminating the militant group Hamas, has killed more than 42,000 Palestinians, according to Gaza's health ministry, and has laid waste to the enclave.

By Amina Ismail and Ahmed Tolba in BEIRUT/CAIRO