The decision was approved during an overnight meeting of Prime Minister Benjamin Netanyahu's security cabinet, Netanyahu's office said.
Hamas' Oct. 7 assault on southern Israel sparked the war in Gaza. Hezbollah opened a second front against Israel a day later and fighting across the Israel-Lebanon border has since escalated, threatening to ignite a regional conflict.
Tens of thousands of Israelis were evacuated from towns along the northern frontier that have been badly damaged by rocket fire and they have yet to return.
Israel's defence minister said on Monday: "The possibility for an agreement is running out as Hezbollah continues to 'tie itself' to Hamas, and refuses to end the conflict. Therefore, the only way left to ensure the return of Israel's northern communities to their homes will be via military action."