Rising unemployment has led to mass poverty among the refugees, while the reduction of services provided by the UN Relief and Works Agency (UNRWA) has compounded problems.
The agency's lack of funding and dangerous working conditions have prevented the expansion of the camps, where the population is growing at a rate of 3% a year. The result is stifling overcrowding in the West Bank, the Gaza Strip and neighbouring countries such as Jordan and Lebanon.
Refugees have also refused rehabilitation sponsored by UNRWA because they fear losing their right to return to Palestine if they were to leave.
The camps were originally set up by the UN after the creation of Israel when hundreds of thousands of Palestinians were expelled and fled from their homes.
But prior to 1948, the majority of Palestinian refugees were land owners: 64% raised cattle, 18% had real estate properties, while only 7% were non-owners; presently about 77% do not own property and less than 1% have agricultural lands. Fourteen per cent run small shops inside the camps.
A study has indicated that 32% of registered refugees have refused to leave the camps even when it would considerably improve their economic status.
Food is distributed in al-Amari
camp near Ram Allah
Despite the hardships, the refugees want to stay for nationalist reasons. They believe that the extension of the camps implies the end of their national cause. The refugees sincerely believe that their rightful place is in Palestine and that their life in the camps is temporary.
The UN operates Palestinian refugee camps in the following countries:
Palestine, The West Bank: Economic conditions continue to deteriorate. About 60% of West Bank residents have fallen below the poverty line. The monthly income for a family breadwinner ranges from nil to 200 dinars. Their economic disadvantage when compared to neighbouring Palestinians may be attributed to their significant financial losses in the 1948 and 1967 wars.
Palestine, Gaza: In the eight camps in Gaza, refugees are desperately short of space. It is common for as many as 30 people to occupy an average three-bedroom house. Roads remain unsurfaced and there is no adequate sewerage system.
Jordan: Since the establishment of Israel, Jordan has accepted the largest number of refugees.
It is the only country that issues the refugees with national passports. But they suffer various forms of discrimination and are worried about plans for permanent settlement that call into question their right to return.
Until 1970 Fatah and the PLO found their strongest support from the camps in Jordan, but the PLO was expelled from the country following clashes with the Jordanian army in 1970-1971 ("Black September").
Lebanon: Here, the government fears that allowing Palestinians to become citizens will disturb the country's delicate Christian-Muslim balance.
Until the departure of the PLO from Beirut in 1982, the Palestinian population had a well-organised communal structure that provided physical and material security. The PLO's departure left it helpless and unprotected.
A woman walks through a
Palestinian camp in Lebanon
The refugees in Lebanon cannot become naturalised citizens nor do they have access to public health or education. They have no civil rights and many forms of employment are closed to them. Some 40% are unemployed. Recent research has shown that refugees in Lebanon face poorer living conditions than other refugees and voice their unhappiness more frequently.
For more than 50 years, the refugees here have faced mounting problems and international neglect, and never more so than now as the humanitarian crisis in the West Bank, East Jerusalem, and Gaza diverts attention from their plight.
Egypt: The shortage of arable land led the government to confine the Palestinians to the Gaza Strip.
Syria: They have the same social and welfare rights as Syrians but are subject to strict political control.
The Gulf states: Refugees emigrated to the Gulf states in the 1960s, often in search of work. They were relatively wealthy members of society who sent money home to their families and supported the PLO financially. Their position was considerably weakened by the Gulf war.
Iraq, Saudi Arabia, Libya, Algeria and Tunisia also hold thousands of refugees.