Lebanon's president rebuffed Secretary of State Colin Powell (search)'s call to replace an Islamic militant group with Lebanese forces in the southern part of the country, a newspaper reported Sunday.

An-Nahar, a leading independent newspaper, reported that President Emile Lahoud (search) told Powell in Beirut on Saturday that the group, Hezbollah, is a "legal political party" whose guerrilla war helped end Israel's 18-year occupation of southern Lebanon.

Powell said the United States had told Lebanese officials of its "concern about the continuing terrorist activities of Hezbollah (search) in the region and around the world." He said Saturday that the Lebanese army should "deploy to the border and end armed Hezbollah militia presence."

Hezbollah, a Shiite Muslim group backed by Iran and Syria, maintains thousands of fighters in the tense Lebanese-Israeli border region. The group was formed in 1982 after Israel launched a large-scale invasion of Lebanon, which ended in 2000.

Hezbollah has been on the State Department list of terrorist groups since the 1980s.

The group also rejected Powell's call.

"Lebanon refuses to take dictation from America," Hezbollah deputy leader Sheik Naim Kassem said Sunday.

Lebanon has rejected U.S. and United Nations demands to send a major military force to secure the area, saying it will not safeguard Israel while no peace deal exists between Lebanon, Syria and Israel.

Meanwhile, the Lebanon-based representative of the militant Palestinian Islamic Jihad group discounted Powell's assertion that neighboring Syria had begun closing offices of groups like Islamic Jihad and Hamas, classified by Washington as terrorist organizations.

"The Americans are trying to put pressure on the Palestinian Authority by giving the impression that Syria has started to take measures against the resistance movements," Abu Imad Rifai told The Associated Press on Sunday.