"The bodies of eight fighters from Fatah al-Islam are still on the streets on the northern side of the camp," Abu Imad Halwani, an official of Fatah, the movement of the Palestinian president Mahmoud Abbas, said from inside Nahr al-Bared.
An Al Jazeera correspondent reported that forces from the Lebanese army entered several hundred metres inside the Nahr el-Bared camp, until they reached the edge of the old camp.
The correspondent said the Lebanese army tightened its control of four buildings in the centre of the camp believed to be where Fatah al-Islam fighters were holed up.
In the meantime, a Lebanese army helicopter shelled sites in the camp where armed members of Fatah al-Islam were believed to be.
Jihad Omar, who is working with rescue teams in the centre of the camp, said that casualties were mounting and that wounded people were lying in the streets.
Omar said that shelling continued in the centre of the camp where there were no Fatah al-Islam fighters, only civilians.
The army claims that it is not shelling the camp indiscriminately.
Fouad Siniora, Lebanon’s prime minister, said "the army is currently leading operations like surgical operations in order to eradicate this phenomenon."
"No civilians have been wounded," he added, referring to the estimated 5,000 refugees trapped by the fighting.
"The Palestinian refugees are not being treated properly by Lebanon"
Sunny, Ottawa, Canada
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The latest fatalities took to 91 the death toll since the fighting erupted on May 20, 38 of them soldiers, the deadliest fighting in Lebanon since the end of the civil war in 1990.
Zeina Khodr, Al Jazeera's correspondent at Nahr al-Bared, spoke to Fatah al-Islam fighters in the camp on Saturday.
She reports that the group says it is open to a negotiation if certain conditions are met, but is also prepared to take its fight out of the camp to Tripoli if the siege continues.
A spokesman for the group denied that they were behind bomb attacks in Beirut and its surroundigns last week.
The government has said it would prefer a peaceful end to the siege, but has also insisted Fatah al-Islam hand over its fighters in order that they stand trial for the assaults on government troops. The group has consistently refused to do so.
The army on Friday again accused Fatah al-Islam of using civilians still trapped inside the camp as human shields.
The Palestinian official said the Fatah al-Islam fighters were firing rocket-propelled grenades and assault rifles against Lebanese troops.
However, the soldiers have "not entered the camp, but have been besieging it from the north and the east," Halwani said.
Khodr says conflicting reports are emanating from both sides, with the army saying it has taken control of Fatah al-Islam positions near the northern entrance to the camp while Fatah al-Islam says 12 army soldiers were killed rather than the reported number of three.
Observing a 38-year agreement the army does not enter Lebanon's 12 Palestinian refugee camps, leaving security inside to militant groups.
The US has expressed strong support for the army operation while expressing concern for the plight of the civilians.
"The Lebanese government is doing what it needs to be able to fight against a very dangerous terrorist group, and to bring law and order throughout the country," said Tom Casey, a spokesman for the state department.