NAHR AL-BARED, Lebanon, July 17, 2007 (AFP) - Lebanese army commandos traded small arms fire with Islamist fighters on Tuesday as they closed in on their positions in a bombed-out refugee camp, an AFP correspondent at the scene said.

The Lebanese flag was hoisted over a small strategic hill captured on Monday, apparently leaving only the Haysassa area deep inside the seafront Nahr al-Bared camp still in the hands of Fatah al-Islam militiamen.

A military spokesman said three soldiers were killed in Monday's fighting with the Al-Qaeda-inspired Sunni extremists around the Palestinian refugee camp in northern Lebanon.

The battle which broke out on May 20 has now cost the lives of 100 soldiers, out of a total death toll of about 200. Dozens of militants have been killed, but the exact number is unknown as the group can not be contacted.

The military also reported that two Fatah al-Islam militants and two fighters of the Syrian-backed Popular Front for the Liberation of Palestine-General Command (PFLP-GC) surrendered on Monday.

Fatah al-Islam has lost its second in command, Abu Hureira, in the battle, according to Abu Nabil, the PFLP-GC chief for the camp who was among the four who surrendered, a senior official from his group told AFP.

The fighting erupted when the militants launched a string of attacks on soldiers, killing 27 troops around the Palestinian camp and in the nearby northern port city of Tripoli.

The Islamists, now believed to number a few dozen, on Monday fired off Katyusha-type rockets, five of which struck fields north of the camp without causing any casualties, police said.

Fatah al-Islam has been firing rockets since last week's evacuation from the camp of militants of the mainstream Palestinian group, Fatah, after having apparently seized their abandoned arsenal.

Fatah and local officials have condemned the action as acts of desperation.

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