Brigadier-General Gal Hirsch is the second Israeli general to quit amid widespread public criticism of military failures during the 34-day war that ended with a U.N-brokered cease-fire in mid-August.
"He has submitted his resignation," a military spokeswoman said of Hirsch, who, according to Israeli media reports, stepped down after a military probe accused him of "improper functioning" after the two soldiers were seized on July 12.
Hizbullah abducted the soldiers in a cross-border raid in which eight other troops were killed. Israel responded with heavy aerial bombardments of Lebanon. The war killed more than 1,200 Lebanese, mostly civilians, and 157 Israelis, mostly soldiers.
Hirsch had been head of the Galilee Brigades, which is responsible for patrolling Israel's northern border.
Israeli media reports said the army's probe had accused him of failing to follow safety procedures that may have prevented the capture of soldiers Ehud Goldwasser and Eldad Regev.
He had failed to drill troops about the possibility of being captured despite repeated warnings that Hizbullah planned to try to seize soldiers, Israel Radio said.
Israel's Maariv newspaper said Israeli reservist general Doron Almog, who has been carrying out an internal probe of events that lead to the war, had called Hirsch and recommended he resign before he publishes his .
The newspaper quoted Hirsch as expressing anger over the conclusions, telling colleagues the report was unfair.
"To say I don't deserve to be a commander is quite absurd. I don't deserve this," Hirsch said.
In mid-September, the top general in charge of Israel's northern front, Udi Adam, quit his command after the army was embarrassed by the nearly 4,000 rockets Hizbullah fired at the Jewish state during the war.
Israel's failure to secure the soldiers' release has hindered full implementation of a UN Security Council resolution that urged that they be freed though stopped short of putting as a condition for ending the war.

Copyright Reuters, 2006