Shells fired by an Israeli-allied militia exploded at an elementary school in southern Lebanon today, wounding 20 children and sending hundreds scurrying for cover.

Israel, which apologized for the casualties, said the village of Arab Salim was shelled after Israeli outposts came under guerrilla attack.

One of the three shells struck a wall around the school, shattering windows and littering classrooms with debris and broken glass. Blood stained the walls.

"The class immediately broke up in panic amid the screams of the wounded and the frightened," said Mohammed Farhat, who was teaching students geography when the attack occurred.

Twenty students, ages 9 to 15, were wounded by shrapnel, said Lebanese security officials, who spoke on condition of anonymity. The children were taken to a nearby hospital. At least three were in serious condition with wounds to their heads and faces, the officials said. Others suffered cuts from shrapnel and glass shards.

The remaining 400 students were shepherded by teachers to sandbagged rooms that are used as shelters, then sent home.

The attack heightened tensions on the last active Arab-Israeli war front a day after Syria and Israel, the key players in Lebanon, resumed negotiations in Washington. The talks are aimed at increasing the chances of a peaceful solution for southern Lebanon.

While officials of the Hezbollah guerrilla movement in southern Lebanon threatened to retaliate--they have in the past fired rockets on northern Israel--leader Said Hasan Nasrallah said he would hold his fire this time, but warned that patience has run out.

The three-story school, which faces a military outpost manned by Israeli soldiers and allied militiamen, has been hit four times before, most recently in May. The only injuries suffered there from an attack before today came in 1991, when seven students were wounded by shelling.