A U.S. official tells the Blotter on ABCNews.com that Ambassador Jeffrey Feltman, in a May 31, 2007 classified cable to Secretary of State Condoleezza Rice, registered his strong objections, saying his staff "unanimously opposes construction" of the embassy on the proposed site.
Hezbollah is believed to be behind two attacks on the U.S. Embassy and an embassy annex in 1983 and 1984 that led to the deaths of 87 people, including eight CIA employees.
Last week, the National Intelligence Estimate on threats to national security cited Hezbollah, closely aligned with Iran, as a group that could potentially attack the United States.
U.S. officials say the proposed embassy site is just a few hundred yards from the scene of fierce fighting last summer between Hezbollah and Israeli forces.
"It boggles the mind," says former State Department security official Tony Diebler. "Any reasonable person that looks at that site, does their homework and sees who controls the area would determine that it's a foolish, dangerous idea to build the embassy there," Diebler said in an interview to be broadcast on ABC News' "World News With Charles Gibson."
But officials say the State Department official in charge of embassy construction, Maj. Gen. Charles Williams (RET) is insisting the embassy be built on the site, which was purchased by the U.S. two years ago for more than $22 million.
In his cable to Secretary Rice, Ambassador Feltman said Gen. Williams maintained it was important to proceed with the proposed site in Baabda area of Beirut because of "the Department's relations with Congress and our global building objectives."
Gen. Williams declined requests from ABCNews.com to comment.
U.S. officials say Williams has ignored how conditions have changed in Beirut since the 2006 Israeli-Hezbollah war.
The officials say Hezbollah, not the government of Lebanon, controls the Baabda area and could sever access to the area at will.
State Department officials say they have been advised by the U.S. military that had the embassy been located at the Baabda site during the summer war, the U.S. military would have only come in once to evacuate the staff.
"Anytime Hezbollah wants to shut the place down," said former State Department security official Diebler, "they're capable of doing it and the loss of life would be tremendous."
The dispute between the U.S. Embassy in Beirut and the State Department in Washington has been simmering since late last year.
At one point, the U.S. Embassy refused to allow a State Department official from Washington, James Golden, managing director of the Emergency Projects Coordinating Office, permission to enter the country for the embassy project by denying normally standard "country clearance."