Lebanese soldiers traded fire with Islamist gunmen and shelled areas around the border town of Arsal on Sunday in a push to dislodge the biggest incursion by militants into Lebanon since Syria's civil war began.

At least 10 Lebanese soldiers have died in the fighting, which erupted after Islamist gunmen seized a local police station on Saturday in response to the arrest of their commander, security officials said.

An unknown number of militants and civilians, possibly dozens, have also been killed, and security sources say at least 16 members of Lebanon's security forces have been taken captive.

Security officials say the gunmen in Arsal include fighters linked to the Islamic State, an Al Qaeda offshoot that has seized territory in Syria and Iraq, as well as Syria's Al Qaeda branch, the Nusra Front.

Residents said many of the tens of thousands of Syrian refugees who had taken shelter in the hills around Arsal had abandoned their camps and were sleeping in the town's streets to escape bombardment. Fires had broken out in some camps.

"They're shelling from all directions," said Qassem Al-Zein, a doctor at the field hospital in Arsal, adding that the hospital had recorded 10 civilians killed so far.

Lebanon, with a population of about 4 million people, has struggled with the shockwaves of Syria's three-year-old conflict, whose sectarian dimensions echo those of its own 1975-90 civil war.

Suicide attacks, car bombs, gun battles, kidnappings and rocket fire have plagued Lebanon, but the confrontation in Arsal has been the biggest direct clash between Lebanon's army and rebels fighting to overthrow President Bashar Al-Assad.

Hezbollah had heavily deployed fighters around Arsal - a Sunni town sandwiched between Syrian government-controlled territory and Lebanese Shi'ite areas sympathetic to the group - a source said on Saturday.

Syrian activists in the town said Hezbollah appeared to have been involved in the fighting, but this was not possible to verify and there was no comment from the group.

Hezbollah fighters have regularly taken part in battles against rebels just over the border in Syria's Qalamoun region for months, helping the Assad government forces to flush out insurgents from towns and villages near the border.

Lebanon's Sunni and Shi'ite Muslim politicians have largely backed opposing sides in the war, with Sunnis usually supporting the mainly Sunni rebels and Shi'ites sticking behind Assad, a member of the Shi'ite-derived Alawite sect. - Reuters