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The Israeli cabinet approved the ceasefire deal - brokered by the US and France - last evening by a vote of 10-1. Announcing the "good news", US President Joe Biden said the ceasefire would take effect from 4 am (7:30 am IST) and that it was a "new start" for Lebanon.
Hezbollah, the only armed group that had refused to surrender its weapons after the Lebanese civil war in 1990, was not present during the truce talks. Lebanese parliamentary speaker Nabih Berri participated in the talks on behalf of Hezbollah.
During the ceasefire, firing will stop from both sides, an official said. However, any violation by Hezbollah would see a forceful retaliation from Israel, Prime Minister Benjamin Netanyahu added.
He said the truce will allow them to focus on Gaza and the "Iranian threat", giving the Israeli military time to resupply. "When Hezbollah is out of the picture, Hamas is left alone in the fight. Our pressure on it will intensify," Netanyahu said.
"We will complete the task of obliterating Hamas, we will bring home all of our hostages, we will ensure that Gaza no longer poses a threat to Israel and we will return the residents of the north back home safely," the Prime Minister added.
As part of the truce, Lebanese forces will begin their deployment towards the south over a 60-day period, during which Israel will have a phased withdrawal from Lebanese territory, an official said. The deal also requires Hezbollah to retreat from the southern border and move up the Litani River.
The ceasefire announcement followed the day of heaviest Israeli raid in Beirut since September. Even early Wednesday morning, less than an hour before the ceasefire began, air strikes hit south Beirut - about two hours after the Israeli army ordered evacuation.
War has been raging across the Middle East with Israel fighting the Hamas in Gaza and the Iran-backed Hezbollah group in Lebanon. Israel and Iran have also exchanged fire over their support to these groups.
President Biden said the ceasefire was designed to "permanently" end hostilities in Gaza and that the US and its allies would provide all assistance to ensure the deal was implemented effectively.
An US official said the Lebanon ceasefire could be a "stepping stone" towards ensuring end of hostilities in Gaza and freeing the hostages.