Dozens of families fled Lebanon's largest on Saturday as clashes intensified between Palestinian security forces and radical Islamist gunmen.
Fierce gunfire and rocket fire could be heard as black smoke billowed over the Ain Al Hilweh camp near the southern port city of Sidon.
Two people were killed when the clashed began on Thursday, after gunmen from the small Islamist Badr group fired at a position of the security forces inside the camp, a Palestinian source said.
The clashes eased on Friday before intensifying again on Saturday.
The camp in Al Tiri district is a few metres from a Lebanese army position, but by long-standing convention, the Lebanese military does not enter Palestinian refugee camps in Lebanon, leaving the factions themselves to handle security.
The Badr group is linked to Bilal Badr, a militant wanted in connection with terrorism who has refused to surrender, according to a Lebanese security official.
In April, week-long clashes between his supporters and Palestinian security forces left nine dead and more than 50 wounded.
A joint Palestinian security force, comprising members of the key Fatah and Hamas factions, has strived for months to rein in Badr fighters.
Ain Al Hilweh, the most densely populated Palestinian camp in Lebanon, is home to about 61,000 Palestinians, including 6,000 who fled the war in neighbouring Syria.
Several armed factions including extremist groups have a foothold in the camp, which has been plagued for years by intermittent clashes.