Cabinet Minister Jacob Edery confirmed that the army had used the bombs to attack "military targets" during its war with Hizbollah in July and August. Previously, Israel had said the bombs had only been used to mark out targets.
During the conflict, doctors in Lebanon reported treating civilians who appeared to have been hit by the shells, which leave their victims with severe chemical wounds that can be fatal.
The reports led the Lebanese President, Emile Lahoud, to accuse Israel of breaching the Geneva Convention, which bans the use of white phosphorous both as an incendiary weapon against civilians and in air attacks against military forces in civilian areas. Yesterday, reports in the Israeli daily newspaper Haaretz revealed that Mr Edery confirmed to parliament last week that it had used the bombs during its operations this summer.
He did not, however, provide details on whether it had been used in any civilian areas, but maintained that the weapons had been used "according to international law".
Speaking on behalf of the Israeli Defence Minister Amir Peretz, Mr Edery said: "The Israeli army holds phosphorous munitions in different forms. The Israeli army made use of phosphorous shells during the war against Hizbollah in attacks against military targets in open ground."
Many human rights organisations, including the International Red Cross, have pushed for a complete ban on using the bombs on any human, rather than the protections towards civilians currently afforded by the Geneva Convention.
The admission of the use of the bomb comes as a 12-year-old boy was killed in Lebanon after ordnance from a cluster bomb exploded in his village in Halta, in southern Lebanon.
Rami Ali Hussein Shibly was picking olives in his village when the bomb exploded, injuring his younger brother, according to security officials.
His death brings the total number of recorded victims of cluster bomb explosions in Lebanon since the conflict began to 21, with another 100 injured, according to the United Nations.
Israel has been accused by both the UN and human rights groups of firing up to four million cluster bombs into Lebanon during its war with Hizbollah, which ended in a UN-brokered ceasefire on 14 August.
UN de-mining experts say up to one million of the cluster bombs failed to explode immediately and continue to threaten civilians, especially children who can mistake the ordnance for batteries or other small objects.
Earlier this month, the British charity Landmine Action warned that the number of civilians falling victim to cluster bombs would rise as people from southern Lebanon return to their homes following the ceasefire.
