Shia community, long linked to al-Assad regime, flees as opposition fighters push into its territory.
Syrian troops have surrounded a Palestinian refugee camp in Damascus a day after air raids killed at least eight people sheltering in a mosque there.
Many residents on Monday fled the area amid clashes between Palestinian factions loyal to and opposed to Syrian President Bashar al-Assad.
Rasim Abu Thawra, an activist who lives close to Yarmouk, told Al Jazeera that the neighbourhood has been bombarded again on Monday.
“Hundreds of families had the opportunity to escape the camp this morning,” he said. “They headed to different destinations. Some of them have relatives outside the camp so they can take shelter there. Others went to mosques in neighbouring areas like al-Midan and al-Zahira.”
Hundreds of Palestinians also crossed into Lebanon.
The attack on the Yarmouk refugee camp comes as activists said another Palestinian camp in southern city of Deraa was raided by the government forces.
UNRWA, the UN agency for Palestinian refugees, said Yarmouk camp was “said to be in a chaotic state; with ongoing fighting in the southern parts of the camp inching northwards, and reports coming in of families trying to escape on foot as cars and other forms of transportation are not able to move within the camp”.
The UN has said it is extremely worried for the safety of nearly 500,000 Palestinian refugees living in Yarmouk, which has also been housing Syrians displaced by violence in nearby districts.
Heavy fighting broke out two weeks ago between Palestinians from the Popular Front for the Liberation of Palestine-General Command (PFLP-GC), supporting the Syrian regime, and rebels supported by other Palestinian fighters.
UN chief alarmed
UN chief Ban Ki-moon called the attack “a matter of grave concern” and his spokesman said he was alarmed by the “dramatic escalation” of the Syrian conflict.
“The secretary-general is alarmed by the continued dramatic escalation of violence in Syria over the past several days, and the grave danger facing civilians in areas under fire,” said spokesman Martin Nesirky.
In response, Syria’s Foreign Minister Walid al-Muallem told Ban that Palestinians should not offer “shelter or assistance to terrorist groups” in Yarmouk, according to state television.
Amid the continued violence, Syrian Prime Minister Wael al-Halaqi on Monday toured battle-scarred Aleppo for the first time since the outbreak of fighting in the northern city in July, according to state television.
“The prime minister went to Aleppo at the head of a delegation to assess the hardships faced by the city due to the criminal actions of terrorist gangs,” the broadcaster said.
Meanwhile, Farouq al-Sharaa, the Syrian vice-president, said in an interview that neither the government nor the rebels can win the country’s 21-month conflict.
“The opposition cannot decisively settle the battle and what the security forces and army units are doing will not achieve a decisive settlement,” he told the Lebanese al-Akhbar newspaper, adding that the rebels fighting to topple Syria’s leadership could plunge it into “anarchy and an unending spiral of violence”.
He said a “historic settlement”, involving formation of national unity government needed to end conflict, which the opposition says has killed more than 40,000 people.
A Turkish newspaper reported on Monday that Turkey has made a new proposal to Russia for an orderly peaceful transition in Syria.
The proposal calls for Assad to step down in the first three months of 2013 and for the transition process to be undertaken by the opposition National Coalition, which was recognised as the sole representative of the Syrian people by Arab and Western states last week, the Radikal newspaper reported.