By Nazih Siddiq

NAHR AL-BARED, Lebanon, June 18 (Reuters) - Lebanese troops shelled al Qaeda-inspired militants entrenched in a Palestinian refugee camp in north Lebanon on Monday, where the army has reported advances after a month of fighting.

Witnesses said clashes between the army and Fatah al-Islam militants erupted early in the morning at the Nahr al-Bared camp. Army shells crashed intermittently into the battered settlement, sending smoke billowing from cinderblock buildings.

"We achieved the destruction of the Samed position on the northeastern side of the camp yesterday and the Lebanese flag now rises from there," a military source said.

The Samed building, which had been used as a weapons store and training centre, was one of Fatah al-Islam's main positions.

The army has slowly chipped away at the area controlled by the militants, without entering the camp's official boundaries. Security forces are barred from going into Lebanon's 12 Palestinian refugee camps under a 1969 Arab agreement.

The fighting is Lebanon's worst internal violence since the 1975-1990 civil war. At least 150 people, including 68 soldiers, more than 50 militants and 32 civilians, have been killed.

At least 27,000 of Nahr al-Bared's 40,000 refugees have fled, mostly to the nearby Beddawi camp, since the fighting erupted on May 20.

Lebanese authorities have demanded that the militants surrender, but Fatah al-Islam has vowed to fight to the death.

Fatah al-Islam emerged late last year after its leader, Shaker al-Abssi, and some 200 fighters split from the pro-Syrian Palestinian faction Fatah al-Intifada (Uprising).

Lebanon's Western-backed government says Fatah al-Islam is linked to Syrian intelligence, a charge denied by Damascus and the group itself. Abssi has said he supports al Qaeda's ideas but has no organisational ties to Osama bin Laden's network.

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