SULTAN YACOUB, Lebanon - Lebanese troops and tanks encircled military bases controlled by Damascus-backed Palestinian militants near the border with Syria, witnesses said on Wednesday.

They said the army had set up a checkpoint at the border village of Sultan Yacoub in the eastern Bekaa Valley, where the pro-Syrian Popular Front for the Liberation of Palestine-General Command (PFLP-GC) runs a bunker dug into the hills.

Army commando units and tanks also deployed in force along other parts of the remote border where suspected Palestinian gunmen shot dead a civilian army contractor on Tuesday.

A security source said the army had tightened its grip along the border and around the Palestinian camps and outposts weeks ago but was on heightened alert after the killing of the contractor, who was part of a team surveying the border.

The issue of armed pro-Syrian Palestinian groups in Lebanon has moved to centre stage after a U.N. Security Council resolution last year demanded Syrian troops withdraw from Lebanon and all militia disarm.

Syria ended its 29-year military presence in Lebanon in April, but military outposts run by militant Palestinian groups backed by Damascus still dot strategic hilltops and remote valleys along the rugged frontier and south of Beirut.

Lebanon launched talks with various Palestinian factions earlier this month to hammer out an agreement over the issue of Palestinian arms outside the camps, but tensions remain high.

The Lebanese government says Palestinian groups must shut down the military posts they hold outside of the dozen squalid refugee camps.

Syrian-backed Palestinian groups, not affiliated to the Palestine Liberation Organisation (PLO) which has taken a softer line, have rejected demands they close down those positions.

About 390,000 Palestinian refugees live in 12 camps around Lebanon, which are the Lebanese army does not enter. (Reuters)