Hundreds of heavily armed soldiers, backed by tanks, armoured personnel carriers and machine gun-mounted jeeps, are surrounding the camp
The rattle of gunfire reverberated around Nahr al-Bared on two occasions during the day, prompting troops to fire shells towards the northern and eastern entrances where Fatah al-Islam is entrenched.
"The Palestinian refugees are not being treated properly by Lebanon"
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As the siege entered its eighth day, political tensions were rising because of divisions over how to handle the standoff and a UN vote this week on the creation of a court to try suspects in the murder of Rafiq al-Hariri, Lebanon's former prime minister.
Al-Hariri was killed in a massive Beirut bomb blast in 2005 which was widely blamed on Damascus.
Syria was later forced to end nearly 30 years of military and political domination of Lebanon.
Lebanon's US-backed ruling majority has accused Syria of stirring the troubles in the north and blamed it for a string of recent bomb attacks in a bid to block the tribunal.
Damascus has denied the allegations.
Troops have kept Nahr al-Bared under siege since Fatah al-Islam attacked army targets on May 20, sparking fierce gun battles in the camp and at the nearby port city of Tripoli, which have left 78 people dead.
A government source said the authorities have given Palestinian groups in Lebanon "the chance to resolve the problems with Fatah al-Islam without any time restraints".
However, mediation efforts were complicated on Sunday when a team of mediators came under fire when they entered the camp, according to their leader, Sheikh Mohamad al-Hajj.
Sheikh Hajj said: "We are focusing on reaching a ceasefire in order to continue our efforts because we came under fire yesterday while inside the camp."
In a separate development, Lebanese soldiers have fired at a car that tried to drive through a checkpoint on a road leading to Beirut's international airport, killing two occupants and arresting a third.
A military spokesman said soldiers first fired into the air when the car did not heed an order to stop on Monday.
He said when the car sped away, the soldiers fired at it, bringing it to a stop and inflicting the casualties.
It was not immediately clear why the car had not stopped.
Tension have been running high in Lebanon since the Nahr al-Bared standoff began.
Since then, four blasts in the Beirut area have killed one person and wounded 24.