Lebanese army soldiers help Syrian refugees, fleeing the violence in Arsal, dismount a truck in Al-Labwa in eastern Bekaa Valley yesterday. Photo: Hassan Abdallah/Reuters

Lebanon’s army surrounded a border town occupied by Islamist militants yesterday as mediators reported progress in negotiations to end the most serious spillover of Syria’s civil war yet onto Lebanese soil.

Soldiers arrested men and evacuated refugees from the hill town of Arsal on the border with Syria. One Syrian refugee said she had seen fighters’bodies lying in the streets.

“We saw death with our own eyes,” said Mariam Seifeddin, a 35-year-old mother of nine, who said she had sheltered with about 50 others in a single room without food or water for three days amid intense fighting.

Saudi Arabian King Abdullah granted $1 billion to help the Lebanese army bolster security as they battle militants in Arsal on the Syrian frontier.

Sunni Muslim clerics trying to mediate an end to the fighting said a ceasefire frequently violated since it was agreed on Tuesday was extended for a second day. Fighting flared just one hour into the extension: the army fired artillery when soldiers came under fire, security sources said.

Political sources said the army was not planning immediately to retake Arsal but to evacuate civilians. A security official and a doctor in Arsal said many militants had fled into the surrounding mountains following the army bombardment.

Arsal is the first major incursion into Lebanon by hardline Sunni militants – leading players in Sunni-Shi’ite violence unfolding across the Levant – which threatens the stability of Lebanon by inflaming its own sectarian tensions. While Lebanon has officially tried to distance itself from Syria’s conflict, the country’s powerful Shi’ite movement, Hezbollah, has sent fighters to aid President Bashar al-Assad.

Dozens of armoured-personnel carriers and tanks were seen on the road heading towards the area.

Lebanese special forces were also being deployed yesterday, arriving at the nearby town of al-Labwa, where hundreds of soldiers are stationed.

Around 30 prisoners with their hands tied behind their backs were driven out of the town on an army truck. Most were young men, many were wearing red kaffiyeh headscarves.

Members of the Muslim Clerics Association said three captive soldiers had been released, militants had started to withdraw and the ceasefire had been extended for 24 hours.

“They pledged to withdraw from Arsal and the news we received is that they started pulling out,” Sheikh Houssam al-Ghali told a news conference.

The clerics said they would start negotiating the release of 27 members of the security forces still being held in the town – 10 soldiers and 17 policemen. That is some 10 fewer than the number cited by officials.

At least 17 soldiers have been killed in the violence. Reports from inside the town suggest dozens of civilians and militants have been killed.

The militants have been identified by officials as members of the Nusra Front, al-Qaeda’s branch in Syria, and of the Islamic State, which has seized large areas of Iraq and Syria.

Rebel sources told Reuters several members of the Islamic State had been killed in the fighting, including senior leader Abu Hassan al-Homsi.

Yesterday, the army was taking women and children out of the Arsal area. A convoy stopped near Labwa to feed them, carrying water, bread and cheese. Barefoot and dirt-stained children, clearly hungry, devoured the food.