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Syrian VP says neither side can win -

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ELEANOR HALL: To Syria now where the vice-president is reported as saying neither side can win the civil conflict raging in his country.

Farouq al-Sharaa is quoted in a Lebanese newspaper. And it was another bloody day in Syria.

The opposition accused the government of a direct attack on a Palestinian refugee camp in Damascus.

Barbara Miller has our report.

BARBARA MILLER: The Syrian conflict is just a few months short of its two-year anniversary.

And it appears that the Syrian vice-president is beginning to see the writing on the wall.

Farouq al-Sharaa is being quoted by the Lebanese daily Al-Akhbar as saying that neither the opposition nor the government forces can achieve a decisive victory.

Every day, Mr al-Sharaa is reported as saying, we are moving further away from a military or political solution.

Mr Sharaa is reportedly calling for confidence building measures between the two sides, supported by the United Nations and neighbouring countries. This he said would pave the way for a national unity government.

It wasn't clear from the newspaper report what role the vice-president thinks president Bashar al-Assad would play in such a government.

He's become increasingly isolated internationally, with a growing number of countries, including the US and Australia, recognising the Syrian opposition council as the country's legitimate leadership.

Laurent Fabius is the French Foreign Minister:

LAURENT FABIUS (translated): I think that the end is nearing for Bashar al-Assad and you must have noticed it. Even if there is controversy, even the Russians are considering it. The problem is that the longer the war continues, the more there are risks of extremism.

The best defence against extremists is Syrian coalition.

BARBARA MILLER: The past few days have seen no let-up in the intensity of violence in Syria.

A video posted online reportedly shows the aftermath of a rocket attack on a Palestinian refugee camp in Damascus, an area where rebel fighters are said to be advancing.

(Sound of men yelling in Arabic)

Loyalties among the half-a-million Palestinians in Syria are divided between the government and opposition.

In the footage, which can't be verified, several bodies lie on the steps of a mosque, the reported target of the attack.

This activist told al-Jazeera that many people had sought shelter in the mosque.

WITNESS: On the surrounding of (inaudible) Hussein mosque in the heart of the camp and an area close to it and there is no, there is a large number of dead and injuries. As for now the situation is like this, so many civilians are trying to run away to more secure places.

BARBARA MILLER: Some reports put the death toll in the mosque attack at eight, some say more than 20 were killed.

Elsewhere, a rebel group says it has captured a military installation near the northern city of Aleppo, killing the commander and taking dozens of prisoners.

Operations to help the hundreds of thousands of people fleeing the fighting are being stepped up.

The United Nations refugee agency has established a joint operation centre between UN agencies and the Jordanian government in anticipation of more refugees.

The UN High Commissioner for Refugees Antonio Guterres says Syria's neighbours need more support to deal with the influx:

ANTONIO GUTERRES: And I think it is high time for the international community to understand that this is not a conflict like many others. We are witnessing the brutal fighting with tragic humanitarian consequences and things are evolving in a way that make us foresee the possibility of 2013 being much more dramatic than 2012.

BARBARA MILLER: The United Nations says around half a million Syrians have been displaced by the conflict and have sought shelter in Jordan, Turkey and Lebanon.

That number, the UN warns could more than double in the first half of the new year.

ELEANOR HALL: Barbara Miller reporting.