Fatah fighters battled members of the Popular Front for the Liberation of Palestine (PFLP) at the Ain al-Hilwah refugee camp near the southern port city of Sidon early on Tuesday, the officials said on condition of anonymity, citing security concerns.
Three Fatah fighters, a PFLP member and a member of the Palestinian Armed Struggle - a police unit that maintains security in the overcrowded and poverty stricken camp - were wounded in the clashes and hospitalised, the officials said.
Machine guns were used in the fighting that began after a fist fight between Fatah member Khalid Haj and PFLP member Jamal Ali Khatib, they said.
Khatib later threw a hand grenade at the house of a Fatah military official, wounding a Fatah man, sparking wider clashes between members of both sides that lasted more than two hours, the officials said.
Ain al-Hilwah is home to about 75,000 Palestinian refugees and their descendants who were displaced by war since the 1948 creation of Israel. It is the largest of 12 refugee camps in Lebanon, which together house about 350,000 Palestinians.
Ain al-Hilwah has been the scene of frequent bombings, assassinations and shootings among rival Palestinian factions vying for control.
The camp is also believed to be used as a hideout by people wanted by the Lebanese authorities.
The Lebanese army controls checkpoints outside the camp, but its troops do not enter.