The Palestine Liberation Organisation said on Thursday it refused to be drawn into supporting any military offensive in the war-battered Yarmouk camp on the outskirts of Damascus, backing away from earlier comments by one of its members that lent support to Syrian army action against insurgents there.

The radical Islamist group Islamic State, which rules swathes of Syria and Iraq, seized almost all of Yarmouk in recent days, brushing aside local militia opposed to Syrian President Bashar al-Assad.

"We refuse to be drawn into any armed campaign, whatever its nature or cover, and we call for resorting to other means to spare the blood of our people and prevent more destruction and displacement for our people of the camp," the PLO said in a statement issued from Ramallah.

Earlier, Ahmad Majdalani, a member of its executive committee who was sent by the PLO leadership to Damascus to discuss the crisis with the government, said he fully endorsed a Syrian military offensive to regain control of the camp.

Majdalani blamed the hard-line Islamists in control of the camp of exploiting the plight of Palestinians to their own ends.

"They (radical Islamists) have tried to use the camp as a launching pad to expand their scope of clashes and their terror activities inside and outside the camp," said Majdalani, a former minister in the Western-backed Palestinian Authority.

Majdalani said the Syrian army alongside local Palestinian groups had some success in pushing back Islamic State and had so far secured 35 per cent of the camp.

The sprawling Yarmouk camp was home to some 160,000 Palestinians before the Syrian conflict began in 2011, refugees from the 1948 war of Israel's founding, and their descendents.

Majdalani said there were just 17,500 residents left, with around 2,000 evacuated since the latest round of fighting.

The Syrian Observatory for Human Rights, which monitors the conflict from Britain, earlier said that Islamic State controlled 90 per cent of the camp after defeating fighters mainly from Aknaf Beit al-Maqdis, a Syrian and Palestinian militia opposed to Assad.

Islamic State, the most powerful insurgent group in Syria, is now only a few kilometres from Assad's seat of power.

The Palestinian official echoed the Syrian government line that the only way to rid the camp of the ultra-radical militants was through force.

"What we have agreed with our Syrian brothers and factions is that the options that existed for a political solution were closed by the fighters of Daesh," he said, using a derogatory term for Islamist State.

"The crimes they have committed ... left us with no choice except a security one that respects the partnership with the Syrian state," he told a news conference in Damascus.

The Observatory has said Syrian air force jets had been waging a bombing campaign on militant hideouts in the camp almost daily since Islamic State fighters infiltrated from the adjacent, rebel-held Hajar al Aswad neighbourhood.

The United Nations has said it is extremely concerned about the safety and protection of Syrians and Palestinians in the camp. Civilians trapped there have long suffered a two-year government siege to force rebels to capitulate that has led to chronic food shortages and disease.

UN Secretary General Ban Ki-moon told reporters in New York the camp was beginning to resemble "a death camp" with its residents facing "a double-edged sword: armed elements inside the camp and government forces outside".

Ban warned that any "massive assault on the camp and all civilians would be yet one more outrageous war crime for which those responsible must be held accountable.

"We simply cannot stand by and watch a massacre unfold," he said.