The Burmese Army and a splinter group of the Democratic Karen Buddhist Army (DKBA) exchanged artillery fire in the Thai-Burmese border area of the Three Pagodas Pass early on Thursday.

A Thai border guard official said at least 30 rounds were fired between 4 a.m. and 6 a.m.

DKBA troops reportedly took control of Phayathonzu but were then forced out, taking up positions outside the town. They were reinforced on Wednesday by about 500 soldiers of the breakaway DKBA Brigade 5, who had taken part in an unsuccessful attempt to occupy the Burmese-Thai border town of Myawaddy, about 120 miles north.

Burmese reinforcements were also reported to be on their way to the Three Pagodas Pass area.

Despite the continuing fighting and the threat of more clashes, many refugees returned to their homes after assurances from Thai authorities that it was safe to go.

Burma's state TV is describing the DKBA faction engaged in the fighting as insurgents belonging to the Karen National Union (KNU), the only non-ceasefire armed Karen rebel group. Although the DKBA accepted the government's border guard force plan (BGF) earlier this year, the faction currently engaged in the fighting rejected it.

Observers said regime propaganda was trying to mislead people into believing that all DKBA troops had accepted the BGF plan.

On Wednesday, the KNU and five other ethnic armed groups reportedly formed a new alliance to fight with the regime troops, increasing the specter of a renewed civil war during the few days after Burma's first election in 20 years.