The Australian Department of Foreign Affairs and Trade confirmed the deaths of two Australian citizens in the strike.
The embassy in Beirut is ready to offer consular assistance to the family, the department said, while warning Australians to avoid travelling to Lebanon due to the volatile security situation and risk of it deteriorating.
The dead have been identified by Middle Eastern media as Australian-Lebanese civilian Ibrahim Bazzi, his wife and Lebanese citizen Shorouq Hammoud, and his brother Ali Bazzi.
"They were in their homes, a medic who works with the Civil Defence in south Lebanon told The National, an English-language news outlet based in the United Arab Emirates.
Ahmad Bazzi, the father of Ibrahim and Ali, mourns over one of the coffins at a funeral procession. (AP PHOTO)
There were no signs of fighting nearby before the strike and Ms Hammoud was recovered first from the debris, he said.
"When they found her she was alive, but she died shortly after," he told The National. This could not be independently confirmed.
Lebanon's National News Agency also reported the deaths, saying the home belonged to the Bazzi family.
Hezbollah, which has widespread support in the area, later announced Ali Bazzi as one of the Shi'ite Muslim group's fighters, Reuters said.
A fighter kisses the coffin of Ali Bazzi, who was killed with his brother and his brother's wife. (AP PHOTO)
Hezbollah, an ally of Palestinian Islamist faction Hamas and considered a terrorist group by Australia, has been exchanging fire with Israel across Lebanon's southern border since the Israel-Hamas war in Gaza began on October 7.
The government was still working to establish whether the man was a part of Hezbollah and is aware of claims, Acting Foreign Minister Mark Dreyfus said.
"We will continue to make inquiries about this particular person, with whom Hezbollah has claimed links," he told reporters on Thursday.
"One of the reasons why the Australian government has listed Hezbollah ... as a terrorist organisation is because of the potential links to Australia and Australians."
Mark Dreyfus says investigations will continue into the Lebanese-Australian man killed in a strike. (James Ross/AAP PHOTOS)
Ms Hammoud was recently granted an Australian visa. She and her husband, who have been married for three years, planned to travel soon to Sydney, Nine News reported.
Ibrahim Bazzi is believed to have moved to Australia in 2020-21.
with Reuters