Lebanon camp fight could go on - Palestinan source

BEIRUT, June 21 (Reuters) The Lebanese army is demanding the surrender of leaders of a militant group holed up at a Palestinian camp, complicating efforts to mediate an end to fighting there, a Palestinian political source said today.

Mediators had been upbeat about the prospects for an end to more than a month of fighting between the army and the al Qaeda-inspired Fatah al-Islam group at the Nahr al-Bared camp in north Lebanon.

''Things have been complicated. The initiative has not succeeded,'' a Palestinian political source said.

''The Lebanese army is insisting on the surrender of all leaders and key members of Fatah al-Islam. It seems the Nahr al-Bared front will remain open for some time,'' the source said.

A Lebanese security source confirmed that the army wanted the surrender of Fatah al-Islam leader Shaker al-Abssi and his military commander known as Abu Hurayra. The group's battle with the army is Lebanon's worst internal conflict since the 1975-1990 civil war.

A group of Palestinian clerics has been leading efforts to end the fighting that has killed at least 164 people, including 75 soldiers, at least 59 militants and 30 civilians.

Sheikh Mohammad al-Haj, one of the mediators, yesterday said the army had yet to respond to a peace initiative presented by the clerics.

The army says Fatah al-Islam started the conflict on May 20 by attacking its posts. The group, which includes fighters from across the Arab world, says it has been acting in self-defence.

Most of the camp's 40,000 residents fled during the early days of the fighting, which has destroyed much of the sprawling maze of alleyways on the Mediterranean seafront.

The army been trying to seize areas controlled by the militants on the outskirts of the camp. Lebanese security forces are not allowed into Lebanon's 12 Palestinian refugee camps by a 1969 Arab agreement.

REUTERS SYU RN1520