BEIRUT - Lebanon's military, locked in fierce battle with Islamists at a refugee camp, is to celebrate Army Day on Wednesday in an event turned into a rallying point in a country with deep political divisions.

On the eve of Army Day, youngsters on roadsides across the capital distributed red-and-white Lebanese flags bearing a cedar tree -- the country's symbol.

Across the country, banners saluting the army float along main avenues as soldiers stand tall on giant billboards with extracts from the national anthem.

The leading An-Nahar daily has distributed a poster of a soldier raising the Lebanese flag amid the ruins of Nahr al-Bared, the refugee camp where the army has been trying to crush Islamist extremists.

Since May 20, the army has been leading deadly battles in Nahr al-Bared against Fatah al-islam, a group of Sunni Arab extremists accused of attacks against the military.

The battle is the army's first serious combat operation since it was reunited after the end of the country's devastating 1975-1990 civil war.

But despite the heavy death toll of 123 soldiers and the slow progress in crushing Fatah al-Islam, the army has remained the only symbol of national unity in a country shaken by eight months of political paralysis.

Prime Minister Fuad Siniora said "this anniversary witnesses heroic acts and sacrifices ... to confront the plots of the terrorist gangs which were seeking to destroy Lebanon, strike its national unity and shake its stability."

"We are determined to make the rifle of the army the protection and deterrent force that would also confront all threats against the nation and its unity," he said in a statement to mark Army Day.

Retired army general Elias Hanna told AFP that, "despite the lack of political consensus, the army has managed to fight against a terrorist organisation for two months and a half.

"It is a new situation; it is the first battle since the civil war, against a new enemy. This is a factor that unites people around the army.

"This is linked to the fact that the army lost 120 martyrs, from all confessions, and this reflects the Lebanese social mosaic," the retired general said.

The army's ranks split during the civil war, leaving Lebanon under the control of warring militias. After the end of the conflict, the army was reunited and now includes soldiers from all Christian and Muslim communities.

Until the battle of Nahr al-Bared, the army's role had been mainly limited to maintaining order in a country faced with a series of political crises.

The army's profile was also boosted when it deployed for the first time in decades in south Lebanon on the border with Israel last year after a 34-day war between the Jewish state and the Shiite militant group Hezbollah.

The army remains weak, as it suffers from lack of proper arms, equipment and training. "It is a young army, it is not experienced. It lacks many means, particularly an air force," said Hanna.

To raise the morale of the troops, the army will organise ceremonies on Wednesday to honor the fallen of Nahr al-Bared. And army chief Brigadier General Michel Suleyman toured the battlefront on Tuesday.

"The salvation of the country will come from you," the general said. "All the people stand by you. They know that you are the cement that unites the country."

The army chief has threatened to resign if the opposition carries out its threat to form a second government.

"As long as there is an army commander, there are no risks," warned Ghassan al-Azzi, political sciences professor at state-run Lebanese University.

"But if the country breaks apart, with two parallel governments, and if the army chief resigns, if the army is divided, then there will be a catastrophe, civil war," he said. -AFP