Beirut: Hezbollah's chief Sayyed Hassan Nasrallah on Thursday threatened Israel with "open war" after accusing the Jewish state of killing one of its top commanders.

"Zionists, if you want this type of open war then let the whole world hear: let it be an open war," Nasrallah told mourners at the funeral of Emad Mughnieh, a legend to Hezbollah but one of the men most wanted by Israel and the US for planning attacks that killed hundreds.

Mughnieh, hunted by Israel and the United States for two decades, was killed by a bomb in Damascus on Tuesday.

Shiite Muslim Hezbollah and its main backer Iran accused Israel of killing him. Israel rejected the charge, though its Mossad spy service had long sought to kill him.

The Jewish state put its embassies and other interests abroad on high alert and boosted troop deployments on the Lebanese border for fear of reprisal.

Investigation

"We have the right, like all human beings, of self-defence and, God willing, we will do whatever is required to defend our brothers, leaders, people and our country," Nasrallah said, addressing the mass funeral via video link.

He said the group's initial investigation into the killing showed that Israel was behind it. He gave no details.

Nasrallah said that while Mughnieh's assassination delivered the group a painful blow, it would not weaken it or its military structure. A visibly emotional Nasrallah said Mughnieh, had played a major role in Hezbollah's 34-day war against Israel in 2006.

Naim Kassem led prayers over Mughnieh's coffin, flanked by other members of Hezbollah's leadership, at a mosque in Beirut's southern suburb. The coffin, draped in a yellow Hezbollah flag, was then carried out by fighters to where thousands had lined up under driving rain.

Some in the crowd wept while most waved goodbye.

Iran's Foreign Minister Manouchehr Mottaki attended the funeral and read a condolence note from Iranian President Mahmoud Ahmadinejad.

Mughnieh, was the most senior member of Hezbollah to be killed since its previous secretary-general, Abbas Mussawi, died in a 1992 Israeli helicopter ambush in southern Lebanon.

Mughnieh, was implicated in the 1983 bombings of the US embassy and US Marine and French peacekeeping barracks in Beirut, which killed over 350 people, as well as the kidnapping of Westerners in Lebanon in the 1980s.

Israel accuses Mughnieh, of planning the 1994 bombing of a Jewish centre in Buenos Aires that killed 85 people and of involvement in a 1992 bombing of the Israeli embassy in the Argentine capital that killed 28.

The United States indicted him for his role in planning and participating in the 1985 hijacking of a US TWA airliner and the killing of an American passenger. Washington welcomed Mughnieh's death.

Mughnieh, is thought to have been commander of Islamic Jihad, a shadowy pro-Iranian group which emerged in Lebanon in the early 1980s and was believed to be linked to Hezbollah.