Residents in Myawaddy expressed fears the Burmese Army would launch a full-scale offensive on Karen rebels who have taken key positions in the town, as gunfire sent thousands of refugees fleeing across the Thai border a day after nationwide elections.

Three people have been reported killed and more than 20 were injured in clashes between the Burma Army and rebels, according to hospital sources.

About 1,000 soldiers of a breakaway faction of the Democratic Karen Buddhist Army, a cease-fire group, moved into the town across from Mae Sot, said a former Burma military official now running a business in town.

The former major, speaking from Rangoon, said his wife and family fled to Mae Sot. "I heard that gunfire started around 9 this morning and my family has crossed [the border]," he said.

The major said people were hiding under their homes to avoid gunfire. Residents are afraid of shoot-outs in the street.

A monk said about 50 people had sought shelter at his monastery about 2 kilometers from Myawaddy. He said and other monasteries in the area were full of refugees.

Daw Hla Than, a shopkeeper near the Friendship Bridge, said both sides began shooting at 9 am "No one dares to go out," she said.

She hid under her house to avoid stray bullets, she said by phone. Her family wants to move to another place, but it's not safe to travel.

Even in Kyarin Seikgyi, a three-hour drive southwest of Myawaddy, residents were digging holes under their homes for safety, said U Saw Terry, a candidate for the local Phalon-Sawaw Democratic Party. "We are scared of both sides," he said.

U Saw Terry said ballots from Myawaddy and Three Pagodas Pass had still not arrived to the township counting center because of the conflict.

Said a former Karen National Union soldier: "The regime is trying to divert people's attention from the election result." The former solider said the DKBA opened the border bridge to allow people to flee the city.

The Burmese Army has blocked the road from Myawaddy to Moulmein at Kawkareik and is not letting any traffic past. They are gathering battalions at Kawkariek, the former fighter said. Other sources have confirmed the road is blocked.

A government official at the Post and Telecoms office in Myawaddy said at 4 p.m. he was still hearing gunfire.

A team of independent journalists is reporting undercover on the national election from inside Burma