Israel’s security cabinet has authorised Prime Minister Benjamin Netanyahu and his defence minister to decide when and how to retaliate for a deadly rocket attack Israel and the US say was carried out by the Lebanese Shia militant group Hezbollah.

Ministers met in emergency session following the strike on the Israeli-occupied Golan Heights on Saturday evening, which killed 12 children and teenagers from the Druze community. Hezbollah has denied responsibility.

It was the deadliest cross-border incident in months of exchanges of fire between the two sides.

The attack has heightened fears that what have been relatively contained hostilities so far could spiral into all-out war.

Western governments are urging Israel to show restraint in its response.

The White House said it had been in “continuous discussions with Israeli and Lebanese counterparts since the horrific attack” on the playing field in the Druze town of Majdal Shams.

It said it was “also working on a diplomatic solution along the Blue Line [the unofficial frontier between Israel and Lebanon] that will end all attacks once and for all”.

On Monday morning an Israeli drone strike outside the Lebanese town of Shaqra, about 6.5km (four miles) from the Israeli border, killed two people, Lebanon’s civil defence said. Israel has not commented on the report.

In Majdal Shams, the funerals of the young victims took place on Sunday amid scenes of raw grief. Thousands of people were gathered as the caskets, draped in white, were carried through the town.

The attack is the most devastating to hit the Druze community, which has lived on the Golan Heights for centuries. They are part of an Arabic-speaking ethnic and religious group based in Lebanon, Syria, the Golan Heights and northern Israel.

Those on the Israeli-occupied Golan Heights have been under Israeli governance since Israel captured the area from Syria in the 1967 war, although many have retained their allegiance to Syria. There are about 21,000 who live on the rocky plateau, about 20% of whom have accepted Israeli citizenship.

The attack on Majdal Shams has caused outrage across Israel and the Druze community, about 110,000 of whom also live in Israel.

Mr Netanyahu cut short a visit to the US to return to Israel following the strike. He held meetings with defence officials before convening the security cabinet on Sunday.

After the hours-long meeting, the prime minister’s office issued a brief statement, saying only that the “members of the Cabinet authorised the prime minister and the defence minister to decide on the manner and timing of the response against the Hezbollah terrorist organisation”.

In a condolence call earlier to the spiritual leader of Israel’s Druze community, Sheikh Muafak Ṭarif, Mr Netanyahu said Hezbollah would “pay a heavy price for this that it has not paid to this point”.

Hezbollah has strongly denied it was behind the attack, reportedly blaming the bloodshed on a failed Israeli interceptor missile.

In a statement on Sunday, the Israeli military Chief of Staff Lt Gen Herzi Halevi said the Israel Defense Forces (IDF) knew “exactly where the rocket was launched from”.

Gen Halevi identified it as an unguided surface-to-surface Falaq rocket with a 53kg warhead. “This is a Hezbollah rocket. And whoever launches such a rocket into a built-up area wants to kill civilians, wants to kill children,” he said.

Previously sporadic fighting between Israel and Hezbollah has escalated since Hezbollah fired rockets at Israeli positions a day after Hamas’s deadly attack on Israel on 7 October. Hezbollah says it is acting in support of the Palestinians.

Israel’s security cabinet has authorised Prime Minister Benjamin Netanyahu and his defence minister to decide when and how to retaliate for a deadly rocket attack Israel and the US say was carried out by the Lebanese Shia militant group Hezbollah.

Ministers met in emergency session in the wake of the strike on the Israeli-occupied Golan Heights on Saturday evening, which killed 12 children and teenagers from the Druze community. Hezbollah has denied responsibility.

It was the deadliest cross-border incident in months of exchanges of fire between the two sides.

The attack has heightened fears that what has been relatively contained hostilities so far could spiral into all-out war.