According to witnesses and Palestinian security sources, fighters from late Palestinian President Yasir Arafat's Fatah faction traded fire with supporters of an Islamist group that has often feuded with Fatah in the camp and relatives of a member of that group.
A Palestinian child and a man in a part of the camp away from the scene of the fighting were injured by stray fire, Palestinian security and medical sources said on Sunday.
The fighting was the most recent in a long history of skirmishes between Islamist factions and mainstream Palestinian groups led by Fatah that have effective control of the camp, which Lebanese forces do not enter.
The Ain al-Hilwa camp near the southern port city of Sidon is the largest of a dozen in Lebanon where about 350,000 Palestinians are registered among the refugees displaced after the creation of Israel in 1948.
The camp is a sensitive issue in Lebanon where the authorities fear that the Palestinian refugees could threaten the delicate sectarian balance of power in the country.