(Edits, adds quote from border report in paragraph 8)

By Patrick Worsnip

UNITED NATIONS, Aug 27 (Reuters) - The Security Council extended the mandate of U.N. peacekeepers in southern Lebanon for another year on Wednesday, but Israel and Lebanon accused each other of obstructing their work.

Israeli and Lebanese envoys welcomed the unanimous council vote but traded charges of violating the U.N. resolution that set up a ceasefire in South Lebanon after a war two years ago between the Jewish state and the Lebanese Hezbollah Shi'ite Muslim group.

Extending the mandate of the 13,000-strong UNIFIL force until Aug. 31, 2009, the Security Council called on all parties to respect the ceasefire and to cooperate with the United Nations to achieve a long-term solution.

UNIFIL has been in Lebanon since 1978 but was beefed up after the 2006 war. Security Council Resolution 1701, approved after the war ended, gave the force tougher rules of engagement, charging it with keeping armed men and illicit weapons out of the area south of the Litani River.

A U.N. report prepared by a team of independent border security experts appeared to confirm Israel's allegations that arms still flow into Lebanon from Syria, despite a ban that the Lebanese border authorities are responsible for enforcing.

Apart from some limited progress in tightening up border monitoring, it said the situation had improved little since a year ago, when the Lebanon Independent Border Assessment Team (LIBAT) made recommendations on improving the situation.

"The overall situation renders Lebanon's borders as penetrable as was the case one year ago," LIBAT's new report said. It did not say it had uncovered specific cases of arms smuggling.

The Lebanese government's rate of progress implementing the previous year's recommendations has been "insufficient" and has "achieved, at most, disconnected islands of progress without a decisive impact on overall border security."

EXCHANGE OF ACCUSATIONS

Israeli Deputy Ambassador Daniel Carmon said there was a "presence and massive redeployment of armed Hezbollah elements ... both north and south of the Litani River" and a "continuous transfer of weapons from Iran and Syria to Hezbollah" in "blatant violation" of Resolution 1701.

Carmon also took aim at a policy statement adopted by Lebanon's new unity government and backed by parliament on Aug. 12 that recognizes Hezbollah's right to use all means possible to regain Israeli-occupied land claimed by Lebanon.

Carmon told the council this "dangerous development" would complicate UNIFIL's ability to fulfill its mandate and "raises concerns of the commitment of the Lebanese government ... to extend its authority over all its territory."

"We expect UNIFIL, under its renewed mandate, to exert its authority to take all necessary action, in areas of deployment of its forces, to ensure that its area of operations is not utilized for hostile activities of any kind," Carmon said.

But Lebanese Ambassador Nawaf Salam said it was Israel that was at fault through daily violations of Lebanese airspace, refusal to hand over maps of cluster bombs it had left in Lebanon and refusing to withdraw from occupied areas.

"Accordingly is there still any doubt about the identity of the party which must be held responsible for obstructing the full implementation of Resolution 1701?" said Salam, who did not mention Hezbollah.

Analysts say the U.N. force has given a degree of stability that has enabled rebuilding and revival in south Lebanon, but tensions still simmer in the absence of an overall settlement.

UNIFIL officers say they are not empowered by their mandate to disarm Hezbollah, nor can they stop Israeli overflights. (Editing by Cynthia Osterman and Eric Beech)

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