Israel pulled the last of its soldiers out of south Lebanon at daybreak today, completing an unexpectedly hasty and chaotic withdrawal that capped one of the most divisive chapters in Israel's history.

The last Israeli tank rolled through the Fatima Gate crossing at 6:41 a.m. (0341 GMT), and then Israeli soldiers padlocked the metal barrier behind them.

"We're going home," the tank's commander, Sagi Bloomberg, a 26–year–old captain, said with a big smile, waving from the turret after he reached Israeli soil.

Soldiers at the gate were euphoric, giving each other bear hugs and high fives.

"The nightmare is over," said Ephraim Gandelberg, a bereaved father whose son was killed in fighting in Lebanon in 1996.

But elsewhere the occupation was ending in humiliation as Israeli soldiers opened fire on their own allied militiamen who were trying to seek sanctuary across the frontier, killing two fighters and a woman and wounding six civilians.

A day that saw the liberation of 160 prisoners from the notorious torture jail at Khiam, the capture by Hizbollah guerrillas of vast amounts of Israeli armour and ammunition and a desperate attempt to evacuate the last Israeli troops from a Crusader castle thus closed with Israel fighting its own Lebanese allies.

Ehud Barak, the Israeli Prime Minister, could never have dreamt of the speed of the collapse; that within 48 hours, Hizbollah gunmen would be lounging in their villages in sight of the northern Israeli border.  Nor that the so-called "South Lebanon Army" militia � so pampered by the Israelis over two decades � would disintegrate, abandoning their armoured personnel carriers, tanks and shells to the Hizbollah guerrillas.

Yet not a single Hizbollah rocket was fired over the Israeli border and not a shot fired at the Israelis by the Iranian-supported resistance army.  The only gunfire came from Israel's side of the frontier.

Not only did Israeli troops shoot at their own militia allies but they poured tank fire on to the roads and wadis of southern Lebanon in a last, vain attempt to prevent the collapse of the occupation zone.

Near Adaissi, a Merkava tank fired a shell into a BBC car used by correspondent Jeremy Bowen, killing his Lebanese driver, while Israeli helicopters almost hit a car-load of Lebanese journalists near Blat.

Israel talked of offering sanctuary to some � not all � of its former Lebanese militiamen although the deputy defence minister, Ephraim Sneh, claimed that Israel preferred not to do so because "it's very cruel to turn someone into a refugee".  That was not the view of the SLA gunmen who streamed towards the border last night, carrying suitcases on their heads and children in their arms.

The last Israeli soldiers inside Lebanon, the very end of an occupation that has cost up to 20,000 lives and lasted for 22 years in violation of UN Security Council Resolutions, were hiding inside their artillery battery in the old Crusader keep at Beaufort Castle last night, awaiting a helicopter evacuation under the cover of darkness.  Hizbollah mortar shells continued to fall around the castle, whose ruins stand high above the Litani river gorge.  The Israelis' final retreat will mark the defeat by a rag-tag guerrilla army of one of the world's most powerful fighting forces.

At Khiam, frightened SLA men � in a scene reminiscent of the end of the Second World War � unlocked the cells of 160 men, almost all of them Shia Muslims and some held without trial for 16 years, allowing the inmates to run for their lives through the fields northwards.  Three torture chambers and a whipping yard were abandoned by the proIsraeli gunmen, surviving proof of the torments that the prisoners endured for almost a quarter of a century.

General Antoine Lahd, the SLA commander, who had earlier announced in Paris his imminent return to "rally" his troops, never showed up.  His men left behind the symbols of their defeat: tons of armour, tanks and armoured personnel carriers, many of them with their engines still running.  Hizbollah guerrillas � thousands of them with rifles, rocket-propelled grenades and mobile phones � organised a victory parade of captured equipment amid scenes of jubilation from returning villagers.

The hundreds of SLA men surrendering to the Hizbollah were handed over, apparently untouched, to Lebanese army troops, although some Shia Muslims who lived under Israeli occupation were angry that their former tormentors had escaped so easily.

A woman in Yarin, close to the Israeli border, said she had once been forced to kiss the boots of an SLA officer but now found he would receive only a statutory two-month jail sentence by way of punishment.  But the SLA was by last night no longer in existence.  The Israelis were on the run.  And Hizbollah was celebrating the first victory of an Arab guerrilla force over Israel.  The Palestinians of the West Bank and Gaza are unlikely to have ignored this week's lesson.

Among the SLA families seeking refuge in Israel were the widow and six daughters of Major Saad Haddad, the first Lebanese army officer to collaborate with Israel and whose militia, then called the "Free Lebanon Army", regularly shelled Lebanese villagers for allegedly allowing Palestinian guerrillas to live among them.  But the SLA was always a surrogate force, its members paid by the Israelis at a rate of up to $500 a month.

Indeed, one of the final blows to morale was the discovery by SLA officers that Israel's promise of severance pay, up to $15,000, was not going to be honoured.  A tent village has been set up in Galilee for ex-SLA officials, some of whom have been involved in torture in Khiam.  Many of these are expected to be given exile in France � the largest number of war criminals to be sent into Europe since the Bosnia war.