Lebanon was also hit by its third bomb attack in four days, further shaking the fragile security of a country battling deep political and sectarian tensions.

Thousands of refugees crowded into makeshift accommodation in northern Lebanon overnight after taking advantage of a ceasefire between the army and Islamist militants and fleeing the Nahr al-Bared camp, the epicentre of the three days of gunbattles.

Women carrying children and men with a few belongings continued to stream out of the besieged camp on foot under the watchful eyes of soldiers posted outside.

Relief agencies are hoping to get more aid to those still inside the once densely populated shantytown, battered by army shelling into a war zone of shrapnel-scarred houses, rubble-strewn streets and burnt out shells of cars.

Lebanon's defence minister flatly ruled out negotiations to end the standoff with Fatah al-Islam, raising speculation of a new battle in the deadliest internal fighting since the 1975-1990 civil war.

"The army will not negotiate with Fatah al-Islam, which has two choices: either surrender or the army will take the military option," Elias Murr said on Arabic satellite television Al-Arabiya.

The al-Qaeda-inspired Sunni militia, which is entrenched in the squalid camp near the shores of the Mediterranean, said it would abide by the ceasefire it declared on Tuesday but was ready to fight again.

"We respect the truce, but we will not surrender. If we are attacked, we will fight until the last drop of blood," spokesman Abu Salim told AFP.

At least 69 people, including 30 troops, 19 Palestinian refugees, 19 militants and one Lebanese civilian, were killed in the fighting which erupted early Sunday.

Meanwhile, France's new Foreign Minister Bernard Kouchner was due in Beirut to show solidarity with Lebanon at "this critical time."

The Western-backed Siniora said his government's goal was to "eliminate the Fatah al-Islam phenomenon" after the fighting stoked fears it could spread to other Palestinian camps and further worsen sectarian and political tensions.

Under a longstanding arrangement, the dozen or so camps that house about half of the 400,000 Palestinian refugees in Lebanon remain outside the authority of the government, leaving security to armed Palestinian factions.