US President Donald Trump is dispatching his Iran negotiating team, led by Vice President JD Vance, to Pakistan for talks, the White House says, adding that the first round of negotiations will take place on Saturday.
With several of Iran's veteran political leaders killed in the war, Iran's delegation is expected to be led by parliament Speaker and former Revolutionary Guards commander Mohammad Baqer Qalibaf, with Foreign Minister Abbas Araqchi.
The confirmation of the talks came after relief over a truce between the United States and Iran gave way to alarm that fighting was still raging across the region, as Israel launched its biggest attacks yet on Lebanon and Iran struck Gulf neighbours' oil facilities.
Even as Israel and the United States paused their attacks on Iran, Israel escalated its parallel war with Iran-aligned Hezbollah in Lebanon, launching its heaviest strikes yet, sending huge columns of smoke above Beirut as buildings crumpled.
The strikes on Lebanon killed hundreds of people and drew a threat of retaliation from Iran, which said the attacks violated a ceasefire deal agreed with the US a day earlier.
But Israeli Prime Minister Benjamin Netanyahu said the ceasefire did not include Hezbollah and that Israel would "continue to strike them".
Netanyahu said Israel had achieved many of its objectives in the war with Iran but still had others to accomplish.
He said that those could be reached either through a US–Iran agreement or by resuming the military campaign, stressing that Israel had its "finger on the trigger" and was prepared to return to fighting at "any moment".
Both Qalibaf and Araqchi questioned whether the ceasefire could hold, saying the ceasefire agreement had been undermined by Israel's continued attacks on Lebanon.
"The US must choose - ceasefire or continued war via Israel. It cannot have both," Araqchi wrote on social media.
Lebanon's civil defence service said 254 people had been killed in Israel's strikes across Lebanon on Wednesday.
The highest toll was in the capital Beirut, where Israeli strikes killed 91 people, it said.
Residents said some of the Israeli strikes had come without the usual warnings for civilians to leave.
Despite concerns over the durability of the ceasefire, Brent crude - which had risen by more than 50 per cent since the war began - was down about 14 per cent on the day, at $US95.20 a barrel on Wednesday.
US stocks jumped to near one-month highs, joining a major global relief rally.
The Strait of Hormuz remained largely shut.
A senior Iranian official involved in the discussions told Reuters that could open on Thursday or Friday ahead of peace talks.
But any opening would be conditional on a framework for the ceasefire being agreed, and be "limited" - with ships still requiring Iran's permission to pass.
Pakistani Prime Minister Shehbaz Sharif earlier said he had invited Iranian and US delegations to meet in the capital Islamabad on Friday, and that Iran's president had confirmed his side would attend.