The IDF did not confirm the report, but said that a gunman was killed in a gunfight near Nablus.
The deaths come the day after the IDF reported that it had arrested 22 "wanted Palestinians" in the West Bank on Thursday.
In a separate incident, an Israeli missile hit a house between Gaza City and Jabaliya early Sunday, injuring two people. The house was destroyed and nearby residences were damaged, Palestinian sources said.
The house belonged to a family with a son in Al Aqsa Martyrs Brigade, a militant group linked to Palestinian President Mahmoud Abbas' Fatah Party. The IDF did not confirm the report but said it had struck a building used by Hamas in Gaza City.
Meanwhile, diplomatic efforts to halt the violence in Lebanon continued in Jerusalem. U.S. Secretary of State Condoleezza Rice dined with Israeli Prime Minister Ehud Olmert on Saturday night, according to the U.S. Embassy in Tel Aviv. Hours earlier, Israel rejected a U.N. call for a three-day cease-fire.
It has not been announced if Rice would travel to Beirut to meet with Lebanese Prime Minister Fouad Siniora, and Rice has said she doesn't plan on taking a comprehensive proposal to the region.
"I don't expect to present somebody with a 'here are the five points you must accept,' " she said. "This has got to be some give and take. This is difficult."
U.S. officials and diplomatic sources involved in the negotiations said Rice's goal is to merge various proposals for ending the fighting into a comprehensive package agreed to by Israel and Lebanon and enshrined in a United Nations resolution.
The U.S.-endorsed plan would require Lebanon to deploy its army with the help of an international peacekeeping force and agree to call for Hezbollah to disarm, with its military wing ultimately integrating into the Lebanese army.
This would all need to happen before an official cease-fire could be declared. In return, Israel would resolve the issue of the disputed Shebaa Farms territory with Lebanon.
Hezbollah has said it will not disarm until Israeli troops leave the disputed region near the Syrian border, which the U.N. recognizes as Syrian territory.
Israel began its operations in southern Lebanon on July 12, after Hezbollah guerillas launched a cross-border raid, killing three soldiers and capturing two others.
Since then, Lebanese Internal Security Forces said Saturday that 421 people have been killed and 1,661 have been wounded in Lebanon.
In Israel, 52 people have been killed, more than half of them soldiers, and more than 1,200 have been wounded, according to Israeli officials.
The U.S. plan is similar to one proposed this week by Siniora and endorsed Friday by his Cabinet, including the Hezbollah ministers. Siniora's proposal includes strengthening the existing United Nations Interim Force in Lebanon in south Lebanon and deploying the Lebanese army to the area.
Both plans call for Israel to agree on a prisoner exchange for the release of the Israelis soldiers kidnapped by Hezbollah and to resolve the issue of the disputed Shebaa Farms territory.
But two major sticking points remain. Lebanon, as well as Arab and European states say a cease-fire must take place before the rest of the deal can be implemented, while the U.S. and Israel insist the force must be in place, the Lebanese army must be deployed and efforts must be under way to disarm Hezbollah before an official cease-fire can be declared.
The composition and mandate of the international force is also a thorny issue. The U.S. and Israel would prefer a European force, while Lebanon wants to expand the existing UNIFIL force. And it remains unclear whether the force would have the authority to fight against Hezbollah.
The U.N. Security Council will begin debating a resolution this week spelling out the way ahead. Later in the week, on Thursday, Rice will attend a ministerial meeting of council members to finalize language on the text.
Rice said she has only read news reports about the Lebanese government proposal -- to which Hezbollah had agreed in principle with some reservations -- but it appeared to have "some very good elements." She called it a "positive step."
France on Saturday circulated a draft U.N. Security Council resolution calling for an immediate cessation of hostilities in the Mideast and laying the foundation for the deployment of a multi-national force aimed at supporting the Lebanese army in disarming Hezbollah, according to diplomatic sources.
On Saturday, Hezbollah leader Hassan Nasrallah said, in a speech aired on his group's Al-Manar TV station, that Israel had been counting on a victory to secure a political solution but has failed.
"It's clear ... that the Zionist enemy has not been able to reach a military victory. I'm not saying that. They said that. The whole world is saying that," he said.
Nasrallah also said Rice's return to the region was to impose the will of the United States on the Middle East. "Rice comes back to the region to try to impose its conditions again on Lebanon -- serving in its new Middle East and serving Israel," he said.
The United Nations' appeal for the cease-fire came from its emergency relief coordinator Jan Egeland "so that we can evacuate wounded, evacuate children, evacuate the elderly and the disabled from the crossfire in Lebanon."
A third of the people killed in Lebanon have been children, he said.
Israeli government spokesman Avi Pazner said Israel rejects a temporary cease-fire for getting civilians out of southern Lebanon.
"There is no need for a 72-hour temporary cease-fire because Israel has opened a humanitarian corridor to and from Lebanon," Pazner told reporters.
On Saturday a Turkish warship with dialysis equipment arrived at the Port of Beirut, as did a U.S. warship with blankets, tarpaulins and medical equipment.
As of 3:30 p.m. (8:30 a.m. ET), 39 rockets had landed in northern Israel, six inside the cities of Acre, Tiberias, Nahariya and Safed, wounding five people.
On the Lebanese side, Israeli troops had mostly withdrawn from heavily bombarded Bint Jbeil and were searching for pockets of resistance.
Two Israeli airstrikes prompted the main border crossing between Lebanon and Syria to close, Lebanese army sources said. Israeli strikes have already left roads leading to the crossing badly damaged.
Two U.N. peacekeepers from the Indian battalion were wounded Saturday afternoon when an aerial bomb detonated near them in south Lebanon, said a spokesman for the U.N. Interim Force in Lebanon. Their observation tower was damaged, UNIFIL added.
UNIFIL had earlier reported Israeli and Hezbollah fire near its positions on both sides of the border and said it "strongly protested all these incidents to the Israeli and Lebanese authorities."