AFP/ Ain al-Hilweh

A ceasefire between armed rivals in Lebanon's largest Palestinian refugee camp has restored calm after several days of clashes, Palestinian sources said Wednesday.

The agreement in the Ain al-Hilweh camp, near the southern Lebanese port city of Sidon, came on Tuesday following street battles that erupted on Saturday night.

"We reached an agreement on a ceasefire, after a series of consultations that included all of the factions," Major General Mounir al-Maqdah, head of the Palestinian security forces in Lebanon, told AFP.

"We felt that everyone was serious about getting the camp out of this cycle of instability, and it's a seriousness that we did not feel in previous clashes," said Maqdah.

An AFP correspondent inside Ain al-Hilweh said fighting had stopped in the camp.

The clashes between Palestinian President Mahmud Abbas's Fatah movement and the Jund al-Sham Islamist group left three people dead and dozens wounded, according to a revised toll.

About 900 residents, including Palestinians who had fled from Syria to settle in Ain al-Hilweh, fled the camp and sought safety in a mosque in nearby Sidon.

Abu Khaled said the situation remained "unpredictable".

"There are families that returned to their homes as soon as the fighting stopped, but they came back to the mosque after getting a few things," Abu Khaled said.

According to Maqdah, Palestinian security forces within the camp would implement the ceasefire and pursue anyone who violates it.

He said one gunman had already been stopped for trying to "reignite security tensions" but he did not specify to which faction the man belonged.

The camp's political leaders will meet on Wednesday with representatives of Ain al-Hilweh's armed factions, which include the Palestine Liberation Organisation, Hamas, and Islamist groups, Maqdah said.

But according to another Palestinian source who spoke on condition of anonymity, "a large number of families are still afraid of returning".

"They feel that there is no guarantee that the clashes won't start again, especially since the past four months saw four rounds of clashes and assassination attempts against Fatah leaders," the source said.

The impoverished Ain al-Hilweh camp has gained notoriety as a refuge for extremists and fugitives and for the settling of scores between factions.

By long-standing convention, the army does not enter the Palestinian refugee camps, leaving the factions themselves to handle security.

More than 61,000 Palestinian refugees live in Ain al-Hilweh, including 6,000 who recently fled the war in Syria, according to the UN's agency for Palestinian refugees, UNRWA.