Israel's war with Hizbullah intensified over the weekend as Katyusha rockets rained down on northern Israel, prompting the IDF to deploy Patriot missile batteries outside Haifa and Defense Minister Amir Peretz to declare martial law throughout the North. Meanwhile. a Katyusha rocket warning system is due to be activated in southern Haifa on Sunday, Home Front Commander Yitzhak Gershon said on Saturday night. The system will sound the alarm a minute before the rockets hit the ground in order for residents to seek shelter. Residents who had previously been asked not to leave their houses are requested to stay in the vicinity of shelters despite the introduction of the warning system. On Saturday, two barrages of Katyushas landed for the first time in Tiberias, the deepest the rockets have landed in Israel since the fighting erupted last Wednesday. Fearing additional rocket attacks on Haifa, home to 270,000 Israelis, as well as strategic installations such as oil refineries and Israel's largest port, the IDF decided to deploy three Patriot missile batteries outside the city, for the first time since the US invaded Iraq in 2003. On Friday night, an Iranian radar-guided missile fired by Hizbullah struck a Navy missile ship off the Lebanese coast. One soldier was pronounced dead and, by Saturday night three soldiers were still missing and presumed dead. Also Friday, a woman and her grandson were killed when a Katyusha rocket hit their home in the community of Meron, near Safed. The child was identified as Omer Pesahov, seven, from Nahariya; his grandmother was Yehudit Itzkovich, 58, from Meron. Dozens of others were treated for shrapnel wounds and shock by Magen David Adom, and the wounds of at least two people were listed as moderate to serious. The IDF Home Front Command urged all residents of the North, estimated at almost a million people, to stay at home on Sunday and not go to work, camp, or spend time outdoors. On Friday, the Lebanese Army fired anti-aircraft missiles for the first time at an IAF fighter jet, the IDF said. The IDF warned that it would strike back at the Lebanese Army. "We will hit anyone who attacks us," a high-ranking IAF officer told The Jerusalem Post late Saturday night. "No one is immune." Martial law, defense officials explained, grants the IDF the authority to issue instructions to civilians and essentially close down offices, schools, camps and factories in cities considered under threat of attack. The IDF also has the authority to impose curfews on cities in the North. Under such a situation, the instructions given by the Home Front Command, previously considered recommendations, become obligatory. It also allows for businesses that were closed following the extreme security situation to receive compensation for money lost. The order signed by Peretz will be in effect for as long as 48 hours. To extend it beyond that period would require governmental approval. Both the cabinet and the Knesset Foreign Affairs and Defense Committee were scheduled to convene on Sunday to discuss the matter. In response to the continued bombardment of northern Israel, IAF fighter jets blasted Beirut's southern suburbs and eastern Lebanon on Saturday, hitting buildings used by Hizbullah and Hamas. Attack helicopters also hit central Beirut for the first time since fighting began last Wednesday following an attack on an IDF convoy in the North that killed eight soldiers while Hizbullah operatives abducted two others. Fighter jets launched four bombing raids on residential areas in the eastern city of Baalbek, where senior Hizbullah officials have residences or offices, witnesses said. Heavy black smoke billowed from the area and ambulances were seen rushing to the scene. The houses of two senior Hizbullah officials in Baalbek, Sheikh Muhammad Yazbek and Hussein Musawi, were destroyed in the airstrike, security officials said. The wanted men were not in the buildings at the time. According to a high-ranking IDF source, all of the Hizbullah leaders have gone into hiding. According to IDF Chief of Staff Lt.-Gen. Dan Halutz, Hizbullah has missiles with a range of 70 kilometers, "and perhaps a little more." Another military official said Saturday the group was also believed to have longer-range missiles that could hit Tel Aviv. With that range, the rockets could also potentially reach Hadera and Netanya. Halutz could not say with certainty the number of missiles in that range that Hizbullah has. Estimates of the total number of missiles in Hizbullah's possession in southern Lebanon range between 10,000 and 13,000. The IDF took into account the very likely possibility that Hizbullah would unleash its rocket arsenal on northern Israel as the IDF began responding to the kidnapping, and thus began striking Hizbullah's rocket infrastructure as a first step as hostilities escalated, Halutz said. "They have enough rockets at this stage to continue firing at Israel," Halutz said. "Hizbullah has taken on for itself the role of the defender of Lebanon, but in reality, it has become the destroyer of Lebanon," Halutz added. Since the beginning of Operation Changing Direction against Lebanon, Hizbullah has fired over 700 Katyushas and mortars at Israel, OC Operations Directorate Maj.-Gen. Gadi Eizenkot said Saturday night. The rockets fell in Safed, Kiryat Shmona, Karmiel, Nahariya and other cities throughout the North. The IAF had destroyed about 60 percent of Hizbullah's long-range missile capabilities as of Saturday night, Brig.-Gen. Rami Shmueli said, adding that 100 rocket launching platforms had been hit, as well as 11 mobile rocket launchers platforms. He added that Hizbullah had "several" missiles that could reach the central area of Israel, including Tel Aviv. "They haven't used these yet due to our deterrent action and their own calculations," Shmueli said, adding that the IAF had carried out thousands of sorties over Lebanon in the past three days. He confirmed that IAF jets have encountered anti-aircraft fire. Eizenkot said the IDF was operating against Hizbullah's entire terror infrastructure in southern Lebanon and the Bekaa Valley. Hizbullah had been thrown off balance by the Israeli response, he said. "The damage done to Hizbullah's military infrastructure so far has not been that great, but the damage to Hizbullah's conceptual picture of Israel's actions and responses has taken a huge hit," Eizenkot said, adding that Hizbullah had been surprised by Israel's response to last Wednesday's cross-border attack and kidnapping. Eizenkot added that Israel's response so far also served to send a message to the Lebanese government that millions of dollars of infrastructure had been destroyed, but that there was still "hundreds of millions of dollars of infrastructure that can still be destroyed." Eizenkot added that Hizbullah operatives were fleeing southern Lebanon and Beirut's Dahiya neighborhood to hideouts in the Bekaa Valley and greater Beirut. Hizbullah was trying to draw Syria into the battle, he said, and pointed to Hizbullah's firing on areas close to the Golan Heights. By doing this, Hizbullah was hoping to draw an Israeli response on Syrian territory, he added. However, Eizenkot said that Syria was not militarily involved in the current conflict. The deployment of Patriot anti-missile defense systems in Haifa, he said, were meant to counter any type of missile threat. He added that the IDF had no intention of carrying out a long-term ground operation in Lebanon. Instead, ground forces would be deployed on a "surgical" level. "Hizbullah may surprise us in the coming days, but we have surprises for them, too," he noted. "Israel has an entire reserve army. So far Hizbullah has reached Haifa, and it may reach even farther south than that. Hizbullah still has capabilities they haven't used yet. We have to prepare for a long campaign." Eizenkot stressed that the IDF was not targeting the Lebanese Army, but that it would should the latter decide to enter the fray. Referring to Friday's strikes on Lebanese Army radar installations along the Lebanese coast, Shmueli said the radar was attacked because it was used to guide the Iranian-made missile that hit the Israeli Saar 5 boat on Friday off the Lebanese coast. AP contributed to the report.