Israel agreed to a 48-hour suspension of aerial activity over southern Lebanon after it bombed a Lebanese village on Sunday and a number of children died, a US official said.
The attack marred US Secretary of State Condoleezza Rice's weeklong mission to halt the fighting between Israel and Hizbullah.
The suspension of over-flights was announced by US State Department spokesman Adam Ereli. He said Israel has reserved the right to attack targets if it learns that attacks are being prepared against them.
"The United States welcomes this decision and hopes that it will help relieve the suffering of the children and families of southern Lebanon," Ereli told reporters traveling with Rice.
The Prime Minister's Office confirmed the report.
But the officials left open the possibility that Israel might hit targets to stop imminent attacks on Israel, and that the suspension could end sooner if the military completes its inquiry into the Kafr Kana tragedy in less than 48 hours.
Israel also said it would allow a 24-hour period where all residents of southern Lebanon who wanted to flee northward would be able to do so, in coordination with the UN.
A US State Department official, who spoke on condition of anonymity about the evolving situation, said Rice had been working on such an agreement for some time before the attack on Kana, Lebanon.
Ereli said that Israel will coordinate with the United Nations to allow a 24-hour period of safe passage for all residents of south Lebanon who want to leave the region.
"We expect that Israel will implement these decisions so as to significantly speed and improve the flow of humanitarian aid," he added.
While Sunday's IAF missile attack on Kafr Kana has made Rice's diplomatic efforts to gain a sustainable cease-fire more difficult, it will not change the parameters of that agreement, both Israeli and US officials said Sunday.
Rice heard of the attack during a morning meeting in Jerusalem with Defense Minister Amir Peretz. She discussed the incident at length in the evening with Prime Minister Ehud Olmert, their second meeting in two days.
Nevertheless, after the meeting with Peretz, Rice reiterated that although she wanted to see a cease-fire in place as soon as possible, "the parties have to agree to a cease-fire, and there have to be certain conditions in place." She made clear that the day's events did not change her position that an immediate, unconditional cease-fire was not the answer.
"We have to realize that we cannot have a circumstance in which there is a return to the status quo ante, in which there is a zone in southern Lebanon in which a terrorist can violate the Blue Line, and create the kind of devastating circumstances that we see today," she said. "And we would not be very responsible if we were not attending to those circumstances as well as working as urgently and as quickly as we can to get the fighting stopped."
Government officials said that while the Kafr Kana incident would not likely impact on the continuation of the current military operations - something that both Olmert and Peretz made clear Sunday - it would undoubtedly be a turning point in the world's perception of the conflict.
Rice is working on putting together an overall agreement for Lebanon that would include a multinational force that would take up positions in southern Lebanon and help the Lebanese government implement UN Security Council Resolution 1559. That resolution calls for the disarmament of Hizbullah and for moving the Lebanese army to south Lebanon.