A rocket attack on Israel from southern Lebanon, claimed by Al-Qaeda but widely blamed on Shiite fundamentalist movement Hezbollah, has shunted Lebanon's ruling coalition closer to possible collapse.
The fragile alliance of anti-Syrian politicians and a pro-Damascus Shiite coalition has been shaken by Wednesday's rocket attack to which Israel responded with an air strike on a Palestinian militia base near Beirut.
While Al-Qaeda in Iraq claimed the attack in an unverifiable statement, Israel and the United States both insist it could not have taken place without the knowledge of Hezbollah, which has been boycotting the government amid calls for the disarming of its military wing.
Five ministers from pro-Syrian Hezbollah and fellow Shiite bloc Amal have refused to take part in cabinet meetings since December 12 in protest at calls for an international probe into a wave of attacks against Damascus critics.
A source close to Prime Minister Fuad Siniora said that talks aimed at ending the crisis had stumbled over the application of last year's UN Security Council Resolution 1559 calling for the disarming of all militias in Lebanon.
Hezbollah militants were instrumental in bringing about the withdrawal of Israeli forces from southern Lebanon in 2000 and the group insists its forces must remain there to prevent a new Israeli occupation.
An Arab diplomatic source said Hezbollah and Amal were thinking of leaving once and for all the government it formed along with Christians, Sunni Muslims and Druze representing Lebanon's fractious ethnic patchwork.
Anti-Syrian Druze leader Walid Jumblatt said Damascus was trying to implicate Al-Qaeda in southern Lebanon to try to show that the area had become a "terrorist base" since Syrian troops quit in April after a 30-year presence.
The leader of Hezbollah's bloc in parliament, Mohammed Raad, said Siniora's refusal to sign a new agreement covering the presence of militias in the country was "unacceptable".
"We are heading for a serious crisis and difficult decisions," he warned.
Siniora himself dismissed the Al-Qaeda claim for the rocket attacks on Israel as "a sort of fabrication and joke", before implying the political crisis could be defused.
"We are condemned to agree with each other ... there will be no resignation, disagreement is forbidden," he told journalists following talks with parliament speaker and Amal chief Nabih Berri.
Shiite MP Bassem Sabeh, part of the anti-Syrian majority, said however that the rocket attacks were aimed at discrediting Hezbollah by showing it did not actually control the south of the country.
Amid increasing international pressure, veteran Israeli politician Shimon Peres described Hezbollah as a "cancer" that had "pervaded and compromised all ranks of Lebanese government".
"Hezbollah holds back Lebanon," said the former prime minister. "It is a state within a state, an army within an army. It is like a cancer. Nobody wants it."