The security source earlier put the death toll as one Italian peacekeeper killed and four others wounded.
"This is a despicable act that is clearly directed at undermining U.N. Security Council Resolution 1701 and stability in the south," said UNIFIL spokesperson Neeraj Singh in a statement.
"In the aftermath of this attack, UNIFIL`s determination and commitment to our mandate is ever stronger," said Singh, "We are continuing our operations in south Lebanon together with the Lebanese Armed Forces for the implementation of our mandate under resolution 1701."
The UNIFIL spokesperson also stressed that the attackers "are to be identified and brought to justice."
Singh said the security of UNIFIL personnel was "paramount," adding that the peacekeeping forces have further strengthened their security measures. UNIFIL was beefed up in the aftermath of the Lebanon war in 2006.
A security source told Xinhua that two Lebanese civilians were hurt due to the explosion.
All the injured were rushed to the Hammoud Hospital in Sidon and the Lebanese Army cordoned off the area where the explosion took place, said the security source.
The attack on Italian peacekeepers coincided with the international Peacekeeping Day, when UN peacekeepers across the world mourn their fallen colleagues.
The last attack on the United Nations Interim Force in Lebanon (UNIFIL) took place in January 2008, when a roadside bomb targeted a UN vehicle in south Lebanon, lightly wounding two peacekeepers. The deadliest of such attacks was in June 2007, when six Spanish peacekeepers died after a bomb hit their armored personnel carrier near the Lebanese-Israeli border.
The attack was widely condemned by Lebanese officials, with outgoing Prime Minister Saad Hariri saying the attack on peacekeepers was tantamount to an "attack on the country`s sovereignty."
Lebanon has been under a caretaker cabinet since the collapse of the national unity cabinet of Hariri in January.
The country`s Prime Minister-designate Najib Mikati condemned the attack on the UN peacekeepers, saying UNIFIL troops exerted " exceptional efforts to preserve peace and stability in south Lebanon. (*)