The International Red Cross and other human rights organisations have urged an world ban on the munitions, saying that they cause chemical burns and lead to undue suffering.
An Israeli military spokesman confirmed a report in Israel's left-leaning newspaper Haaretz that it has used phosphorous munitions in the 34-day offensive against Hezbollah, which ended in a U.N.-brokered cease-fire on August 14.
"The army made use of phosphorous shells during the recent conflict with Hezbollah in Lebanon for the purpose of attacking military targets located in open areas," the Israeli military said in a statement.
"According to international law, the usage of phosphorous ammunition is permitted and the army conforms to international regulations and standards."
The Pentagon has acknowledged using incendiary white-phosphorus munitions in a 2004 assault against insurgents in the Iraqi city of Falluja. It says using them against enemy fighters is legal and not banned by any convention.
Human Rights Watch has also accused Israel of using cluster bombs in populated areas of southern Lebanon during the war, which killed about 1,200 Lebanese and 157 Israelis.
Hezbollah, which fired nearly 4,000 rockets into northern Israel, was also accused by human rights groups of using cluster munitions, which are small bomblets that remain unexploded on the ground.