Palestinian mediators pressed for a negotiated solution to a week-long siege of a Palestinian refugee camp Sunday, with the Lebanese government demanding the surrender of Islamic militants inside but reluctant to rush into an all-out assault.

The leader of the Fatah Islam militants said his fighters would not surrender.

"We wish to die for the sake of God," Shaker Youssef al-Absi said in a video shown on Al-Jazeera television on Saturday. "Sunni people are the spearhead against the Zionist Americans."

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Al-Absi, a Palestinian, has said he is inspired by Usama bin Laden and has been linked to Al Qaeda in Iraq. Mainstream Palestinian factions have distanced themselves from him.

The Lebanese government was in a bind over its campaign to uproot Fatah Islam militants barricaded inside the Nahr el-Bared refugee camp. An attack to crush the fighters could be bloody — for both troops and the thousands of Palestinian civilians still trapped inside.

It would also risk deepening Lebanon's political divisions. Hezbollah, the most powerful opposition movement, has warned the military against attacking and if the assault goes badly, it could boost the Islamic militant group's campaign to oust Western-backed Prime Minister Fuad Saniora.

The military demands the fighters be handed over for prosecution for attacking Lebanese troops last week.

Despite sporadic exchanges of gunfire, a fragile truce has held at the camp in northern Lebanon for five days, with hundreds of Lebanese troops surrounding the camp and building up their forces — with U.S. military help — to prepare for an attack.

The truce followed three days of heavy fighting at the camp in which 20 civilians, 30 Lebanese soldiers and up to 60 militants were killed.

During the halt in fighting, about 25,000 of the camp's 31,000 refugees fled, most of them crowding into the nearby Beddawi camp, Hoda al-Turk, a spokeswoman for U.N. Relief and Works Agency, UNRWA, said as she toured Beddawi on Sunday.

The director of UNRWA in Lebanon, Richard Cook, said Sunday that one of the organization's Palestinian employees was killed Tuesday. He said conditions in the camp were "very serious and very poor" because the water, sewage and electricity were not functioning.

Palestinian factions have presented the government with a four-point plan aimed at a peaceful resolution to the camp standoff, Abu Imad Rifai, a representative of the Palestinian militant group Islamic Jihad, told the Associated Press on Sunday.

The plan calls for a cease-fire, the creation of a Palestinian security force to maintain law and order in the camp, the barring of other armed groups in the camp and the creation of "a mechanism for the departure" of Fatah Islam from the camp, Rifai said.

However, the plan falls short of Lebanese government demands for the handover of the militants.

"The repercussions of a military solution are much more serious than a political solution," Rifai said, in a clear warning that a military assault on Nahr el-Bared would trigger violence in Lebanon's 11 other Palestinian refugee camps.

Late Sunday, a hand grenade thrown at security forces at a major Beirut intersection slightly wounded two policemen, a soldier and two passing civilians, police said.

The grenade was tossed off a bridge and fell near a checkpoint in a Sunni Muslim neighborhood. The assailants fled, and police pursued them.

Three big explosions in Beirut over the last week, killed one woman and wounded nearly 30 other people.

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