Renewed fighting erupted at dawn at Nahr al-Bared camp near the northern port of Tripoli, Lebanon's second largest city. The army is attacking Fatah al-Islam, a small al Qaeda-inspired Sunni group that made its base in the camp last year.
The group said it would stop fighting from 1700 hrs IST as long as the army did the same. ''We are giving a chance for calm and a ceasefire,'' Fatah al-Islam spokesman Abu Salim told Reuters.
A security source said the army would not fire unless fired upon. Camp residents have been calling for calm, saying there were dead and wounded lying on the streets.
Fatah al-Islam has little local support, but the firepower the army has turned on the camp has begun to anger Palestinians.
''We have seen many wars but never seen bombardment in this way.
Entire areas have been destroyed,'' Jamal Laila, 40, told Reuters by telephone. ''Children have no milk, water or bread.
''For the sake of 10, 20 or 30 individuals an entire camp is being massacred,'' he said, weeping over the phone.
Speaking from the same number, Aisha Laila, 40, said her five-month-old child had no milk and her three other children were crouched in a corner while bombs hit nearby houses.
''Perhaps those Fatah al-Islam are here. But we don't know them and don't know where they are. Why are we being bombarded?'' A UN aid convoy waited on the outskirts of the camp, but could not enter while the violence continued.
''We are very concerned about the humanitarian situation that is deteriorating every minute,'' said Hoda Samra, spokeswoman for UNRWA, the agency that cares for Palestinian refugees.
''We have been trying since yesterday to bring in basic food and medical supplies to the camp. We have trucks loaded with water, bread and milk for the babies and medical supplies.'' At least 22 militants, 32 soldiers and 27 civilians have been killed since the army and Fatah al-Islam began fighting on Sunday, making it Lebanon's worst internal violence since the 1975-1990 civil war. Fifty-five soldiers have also been wounded.
Samra said casualties in the camp had been high, but no accurate figures could be gathered while the fighting went on.
''The population is running out of water, bread. There's no electricity. Most of the telephones have been cut. We have little contact with our staff members,'' she said.
BOMBS IN BEIRUT In Beirut, a bomb exploded in a shopping area in a mainly Sunni Muslim area yesterday night, wounding at least seven people. It appeared to mirror a blast on Sunday that killed a woman and wounded 10 people in a mainly Christian district.
A faxed statement in the name of Fatah al-Islam claimed responsibility for the blasts and threatened more. But group spokesman Abu Salim denied it was involved.
Lebanese Druze leader Walid Jumblatt, a fierce foe of Syrian influence in Lebanon, said more such attacks were likely.
''Unfortunately I expect that the explosions will increase,'' he told reporters, accusing Damascus of backing Fatah al-Islam.
Crowds gathered at the Palestinian refugee camp of Beddawi, 9 km from Nahr al-Bared, demanding a ceasefire and shouting slogans against the Lebanese army and government.
Hazma Qassem, a mosque imam in Beddawi, said people had at first opposed the militants but had turned against the Lebanese army due to its ''scorched-earth policies''.
In Ain al-Hilweh camp in southern Lebanon, Islamist militants blocked roads with tyres and several shops closed. ''If the fighting (in the north) doesn't stop, the war will be with all Islam not just Fatah al-Islam,'' one militant said.
Prime Minister Fouad Siniora's government has said it wants to root out Fatah al-Islam, which it sees as a tool of Syria something denied by Damascus and the group itself.
''We are going to continue fighting until the last shot. There will not be another Jenin massacre,'' Abu Salim, the group's spokesman said, referring to an Israeli assault on a refugee camp in the West Bank in 2002.
Palestinian leaders met Siniora in Beirut to discuss the crisis.
''We have agreed on measures to tackle and contain the situation,'' PLO representative Abbas Zaki said afterwards.
In Ramallah, the PLO's executive committee, led by President Mahmoud Abbas, urged the Beirut government to distinguish between the ''terrorist group'' and Palestinians in Lebanon.
The United States said Lebanon was justified in attacking the militants. ''Extremists that are trying to topple that young democracy need to be reined in,'' President George W. Bush said.
REUTERS DS KN1720