"This war aimed to impose a new Middle East, broken up into confessional and ethnic mini-states, serving the interests of the United States and Israel," said the leader of the Shiite militant group which held out against the Israeli army for 34 days in July and August 2006.

Before 5,000 seated supporters in Bint Jbeil which with other southern towns bore the brunt of Israel's military onslaught, Nasrallah said in the televised address that "the American project was swept aside by the victory of the Islamic Resistance", the armed wing of Hezbollah.

The black-turbanned Nasrallah, who has been in hiding since the war sparked by Hezbollah's capture of two Israeli soldiers in a cross-border raid, said both Washington and Israel were counting their losses since the conflict.

Another aim of the war, which cost more than 1,200 lives in Lebanon, mostly of civilians, according to Nasrallah, was to strengthen the Western-backed government of Prime Minister Fuad Siniora.

"The Israelis and Americans wanted the Siniora government to expand its authority to the whole of Lebanon's territory to the detriment of the resistance, but that was another failure," he said, gesticulating with his right hand to stress his points.

Sheik Hassan Nasrallah said the United States and Israel had failed to achieve their declared goal of crushing Hezbollah because of the guerrilla group's steadfastness during the 34-day war.

"There is no new Middle East after the August 14" cease-fire that ended the war, Nasrallah told a mass rally in the southern town of Bint Jbeil. "It's gone with the wind."

He also dismissed unspecified pressures to release two Israeli soldiers captured by Hezbollah in a cross border raid that triggered last year's war. Without explicitly confirming that the detained soldiers were still alive, Nasrallah hinted they would only be freed in a swap with Lebanese prisoners held by Israel.

Speaking in a televised speech aired by the group's Al-Manar television, he called on Lebanese political parties to seek unity.

Nasrallah did not personally attend the rally, but his speech was relayed to the crowd in Bint Jbeil through a giant screen set up on the town's main square. Located near Lebanon's southern border with Israel, Bint Jbeil was among the towns worst hit during last year's conflict.

The Hezbollah chief's repeated references to "a new Middle East" was an allusion to comments by U.S. Secretary of State Condoleezza Rice, who called during last year's war for such a concept, describing it as a new era of democracy and peace for the region. Hezbollah and other U.S. detractors say the U.S. vision aimed at reinforcing Israel.

"The objectives of the July 2006 war have all collapsed, in only 33 days," Nasrallah said. "Magic has turned against the magician," he said.

Saturday's rally was organized by Hezbollah to mark the first anniversary of the war with Israel. Hezbollah had claimed victory against Israel in the fighting that ended with a U.N.-brokered cease-fire, calling it "a divine victory."

Lebanon has been plunged in a deep political crisis since mid-November when six pro-Syrian ministers, including five Shiites, stepped down from the Siniora government, demanding the formation of a new cabinet with greater representation. -Agencies