The man was driving a blue vehicle near four Israeli army vehicles on the Qlaia highway three miles south of Marjayoun, according to the officials, who spoke on customary condition of anonymity.
It was the first suicide bombing in nearly four years in southern Lebanon, the last active Arab-Israeli war front.
Witnesses at the scene said the children were in a car driving past the military convoy when the blast went off.
Israeli and allied militiamen in nearby positions rushed to the scene and extracted the charred and disfigured body of the suicide bomber, the officials said. They had no details on the driver's identity.
Ambulances with sirens wailing transported the four injured children to the Marjayoun hospital, the officials said.
The suicide bomber apparently detonated the car bomb prematurely, and it did not significantly affect the military convoy, according to officials of the Israeli-allied South Lebanon Army militia.
The bomber's car was ripped into two and the highway was strewn with broken glass.
Flares lit the sky above the scene to aid in rescue operations, the security officials said.
Qlaia is a hilly village three miles north of the Israeli border in the central sector of the "security zone" that Israeli troops occupy as a buffer against cross-border guerrilla attacks.
Israeli missiles also retaliated Thursday to guerrilla attacks in south Lebanon. It was the third straight day of fighting following a brief lull stemming from Dec. 15-16 Israeli-Syrian peace talks in Washington and a cease-fire for guerrillas to recover remains of those killed in fighting this year.
Syria is the main power-broker in Lebanon, and any eventual peace agreement between Syria and Israel is expected to lead to an Israeli withdrawal from southern Lebanon. Israeli Prime Minister Ehud Barak has promised to withdraw Israeli troops from south Lebanon by July through an agreement with Syria.
There were no reports of casualties in the guerrilla attacks or retaliatory air raids.
Israeli jets fired two air-to-surface missiles at targets in Aqmata, 12 miles north of the Israeli border, Lebanese security officials said.
In Jerusalem, an Israeli army spokesman confirmed the raid and said all planes returned safely to their bases.
Israeli shelling in the same province, Iqlim al-Tuffah, followed the air raid, according to the Lebanese security officials. They spoke on customary condition of anonymity.
The air raid came 30 minutes after guerrillas attacked positions manned by Israeli troops and the SLA at Sojod, near Aqmata, the officials said.
The Amal guerrilla group claimed its men attacked Israeli positions elsewhere at Blat and Arnoun in the western sector of the scurity zone earlier in the day, "scoring direct hits."
No details were available.
The Iranian-backed Hezbollah and the pro-Syrian Amal are Shiite Muslim groups trying to oust 1,500 Israeli troops and 2,500 SLA militiamen from the security zone. Israel established the zone in 1985 as a buffer against guerrilla attacks on its northern towns.
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