Israel and Lebanon-based Hezbollah militants began a ceasefire Wednesday in a major step toward ending nearly 14 months of fighting as a region on edge wondered whether it will hold.

The agreement with Lebanon will maintain Israel's freedom of operation there to act in defence to remove threats posed by Hezbollah and enable displaced residents to return safely to their homes in northern Israel, Israeli government spokesperson David Mencer told Reuters.

A ceasefire between Israel and Hezbollah came into effect Wednesday morning in Lebanon. As part of the deal, brokered by the United States, Israel will gradually withdraw its forces from Lebanon over the next 60 days and Hezbollah would not entrench itself near the Israeli border.