SIDON, Lebanon (Reuters) - A bomb killed a senior official in the Palestinian Fatah faction and four other people in southern Lebanon on Monday, security sources said, increasing tensions in the country's volatile refugee camps.

Kamal Medhat, deputy head of the Palestine Liberation Organization in Lebanon, was killed with his companions on a road near Mieh Mieh refugee camp outside the southern city of Sidon.

The bomb, hidden under a manhole cover, hurled one car off the road into a nearby orchard. Another car plunged into what appeared to be a crater left by the blast. Security sources estimated the weight of the bomb at 25 kg (55 pounds).

Palestinian President Mahmoud Abbas condemned Medhat's killing as an act of terrorism. Hamas, rival of Abbas's Fatah faction, also condemned the attack.

Palestinian sources in Lebanon said Medhat had been involved in an internal power struggle within Fatah, while senior Hamas official Osama Hamdan said he had played a "very great role" in easing tensions among Palestinian groups in the country.

Describing Medhat as a martyr, Hamdan told Hezbollah's al-Manar television it was not possible to say who was behind the attack, but said the perpetrators had served Israeli interests.

Medhat had been accompanying Lebanon PLO representative Abbas Zaki, who was not injured in the blast, on a visit to Mieh Mieh camp. Lebanon is home to 12 Palestinian refugee camps that house more than 200,000 registered refugees. Both had been attending a meeting to reconcile feuding families in the camp.

Both the PLO and Hamas issued statements urging the authorities to find the perpetrators and bring them to justice.

Hamas called for Palestinian factions to show "unity in confronting this crime" and called for "the continuation of efforts to strengthen unity ... to guarantee security and stability in the Palestinian camps in Lebanon."

Tensions have been high in Mieh Mieh and the nearby Palestinian camp of Ain al-Hilweh, where Fatah and a range of Islamist factions compete for influence.

Two people, including a Fatah activist, were killed on Saturday in a gunbattle in Mieh Mieh camp. The clash was attributed to a family dispute.

Tensions among Palestinians remain a potential risk to stability in Lebanon, which has suffered from a string of assassinations, a war with Israel and a paralyzing internal political crisis in the past few years. Lebanon is due to hold a parliamentary election on June 7.

"I fear that this might be a sign of an expansion of Palestinian-Palestinian conflicts in Lebanon," said Nabil Boumonsef, a political commentator in an-Nahar newspaper. "Palestinian-Palestinian conflicts could be spreading faster than we were expecting," he said.

(Reporting by Laila Bassam, Tom Perry, Nadim Ladki in Beirut; Ali Sawafta and Mohammad Assadi in Ramallah; Writing by Tom Perry; Editing by Dominic Evans)

© 2009 Reuters