The Israeli army “violated the withdrawal line [Blue Line] and fired smoke bombs at a Lebanese army patrol” between 11am and midday on Saturday, the Lebanese army said in a statement.
The patrol was accompanying a bulldozer that had been sent to remove an earth barrier erected by the Israeli army north of the withdrawal line in the area of Bastra, it said.
“The patrol members responded to the attack by firing tear gas at the enemy members, forcing them to withdraw to the occupied Palestinian territories,” it said.
The Israeli military said it was Lebanon that started the violence.
“A short while ago, soldiers spotted an engineering vehicle’s shovel crossing the Blue Line from Lebanon into Israeli territory in the area of Mount Dov,” a statement from the Israeli military said.
“In response, soldiers used riot dispersal means.”
It said the vehicle "returned to Lebanese territory".
Unifil, the UN peacekeeping force in the area, said there had been tension on Saturday.
“Unifil is in touch with the parties to decrease tensions and prevent a misunderstanding. At the moment we are on the ground, monitoring the situation and trying to bring calm back to the area,” spokesman Andrea Tenenti said.
The demilitarised Blue Line was set by the UN in 2000 to confirm the withdrawal of Israeli forces from Lebanon.
And this month, Israel accused Hezbollah's ally Iran of building an airport in southern Lebanon to be used a launch pad for attacks against Israelis across the border.
Israel and Hezbollah fought a war in 2006 in which more than 1,000 Lebanese civilians and 44 Israelis were killed. A total of 121 Israeli soldiers and about 250 Hezbollah fighters also died in the conflict.
Since then, fighting across the border has avoided escalating into full-scale war, but this year there have been several flare-ups.
In July, a rocket was launched from Lebanon at Israel and the Israeli military struck back.
Palestinian militants also operate in the border area and have fired rockets into Israel in the past, drawing Israeli fire.
In May, five members of the Popular Front for the Liberation of Palestine were killed in an explosion in the Lebanese town of Qusaya, which the group blamed on an Israeli air strike, although Israel said it was not involved in the incident.
In April, Israel blamed Hamas militants based in Lebanon for firing 34 rockets into Israel, which again led to retaliatory strikes.