Nearly 50 combatants were killed in the first day of fighting Sunday, but it was not known how many civilians have been killed inside the Nahr el-Bared camp on the outskirts of the northern port city of Tripoli.
Palestinian officials in the camp reported at least nine civilians were killed Monday, along with 40 wounded. The figures could not be confirmed because emergency workers or security officials have not been able to get in.
The White House said it supports Lebanese Prime Minister Fuad Saniora's efforts to deal with fighting, and the State Department defended the Lebanese army, saying it was working in a "legitimate manner" against "provocations by violent extremists" operating in the camp.
Black smoke filled the sky over Nahr el-Bared as fires raged for hours and heavy gunfire and explosions rang out constantly. Shells could be seen thudding into buildings in the seaside camp.
Fighting paused briefly in the afternoon to allow the evacuation of 18 wounded civilians, according to Saleh Badran of the Palestinian Red Crescent Society. But the fighting quickly resumed. Ambulances raced through the streets of nearby Tripoli, where many shops were closed and many residents stayed inside.
"There are many wounded. We're under siege. There is a shortage of bread, medicine and electricity. There are children under the rubble," Sana Abu Faraj, a refugee, told Al-Jazeera television by cell phone from the camp.
Late Monday, residents reported an explosion in a Muslim neighborhood of Beirut, the capital. The Future TV station said the blast occurred in the Verdun shopping area, while Hezbollah's Al-Manar television said it took place in a parking lot in the posh district. Television footage showed a burning car and at least one injured man. On Sunday night, a bomb near a mall in the Christian sector of the capital killed a woman and wounded 12 other people.
Lebanon was already in the midst of its worst political crisis between the Western-backed government and Hezbollah-led opposition since the end of the civil war.
The battle was an unprecedented showdown between the Lebanese army and militant groups that have arisen in Lebanon's Palestinian refugee camps, which are home to tens of thousands of people living amid poverty and crime and which Lebanese troops are not allowed to enter.
The troops were fighting a group called Fatah Islam, whose leader has said he is inspired by al Qaeda leader Osama bin Laden and was training militants for attacks in other countries. Lebanese officials have also accused Syria of using Fatah Islam to stir up trouble in Lebanon, a charge Damascus has denied.
Contributing to the problem, a draft Resolution is circulating in the Security Council which would create a special tribunal to try individuals implicated in the assassination of Lebanon's former Prime Minister Rafiq Hariri.
"That idea has pitted Lebanon's prime minister and president and divided factions within Lebanon," says CBS News foreign affairs analyst Pamela Falk. "The United Nations secretary-general weighed in on Monday, saying that the actions of Fatah al-Islam are an attack on Lebanon's sovereignty and stability, but did not take a position on the controversial tribunal."
Lebanese officials said one of the men killed Sunday was a suspect in a failed German train bombing — another indication the camp had become a refuge for Fatah Islam militants planning attacks outside of Lebanon. In the past, others affiliated with the group in the camp have said they were aiming to send trained fighters into Iraq and the group's leader has been linked to al Qaeda in Iraq.