The clashes erupted last night as a security force of leading Palestinian factions in the Ain al-Hilweh camp was deployed under a new security plan, a source in the Palestinian Fatah faction said.
"It came under fire from a neighbourhood under the influence of extremist Islamist groups, which oppose the security plan of the factions and their deployment," the source told AFP.
Palestinian factions in the camp accused a small militant group linked to an extremist Islamist of firing on the security force after demanding that the deployment not extend to its area of influence.
Medical sources told AFP that the clashes killed two people and wounded 21, with at least one member of the security force among the dead.
An AFP correspondent on the outskirts of the camp said fighting was continuing on the narrow streets of its residential neighbourhoods, with the sound of machine gun fire and rocket-propelled grenades audible in much of the surrounding city of Sidon.
A resident of the camp's Tireh district, where heavy clashes were ongoing, said the fighting had set at least seven houses alight and trapped dozens of families.
And Lebanon's health ministry announced it was evacuating patients from the Sidon governmental hospital adjacent to the camp and moving them to other facilities.
An AFP photographer saw members of the Lebanese Red Cross wheeling a baby in an incubator on a stretcher from the hospital into the back of an ambulance for transfer.
Ain al-Hilweh is home to multiple armed factions, and has been plagued by intermittent clashes between them as well as against smaller extremist groups.
By long-standing convention, Lebanon's army does not enter Palestinian refugee camps, where security is managed by joint committees of Palestinian factions.
Ain al-Hilweh is home to some 61,000 Palestinians, including 6,000 who have fled the war in Syria.
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