The Southeast Asian country has been in chaos since a February coup, with more than 1,200 people killed as the military cracks down on nationwide dissent, according to a local monitoring group.

So-called "people's defence forces" (PDF) have sprung up across the country to take on the junta, escalating attacks and bloody reprisals.

On Friday, local media and witnesses reported that junta troops had shelled the town of Thantlang in western Chin state after a confrontation with a local self-defence force.

Locals said a fire then engulfed the town of some 7,500 residents, destroying dozens of homes and structures -- including a Save the Children office in Thantlang, the London-based charity confirmed in a statement.

The junta's information team confirmed Saturday that two churches and 70 homes were burnt down in Thantlang, accusing the PDF of the blaze after security forces had clashed with their fighters.

Junta spokesman Zaw Min Tun told local media the military's role in Thantlang's razing was "groundless accusations".

"Our security forces and civil servants tried to stop the fire, but they could not do it as those PDF attacked them," he said, adding that one soldier was killed in the melee.

"It was the PDF who burnt (the town), not our Tatmadaw," he said, referring to the military by its Myanmar name.

AFP could not independently verify the reports from the remote region.

Most of Thantlang's inhabitants fled the town during clashes last month, many of them crossing the border to India.

Save the Children said in a statement Friday the town was "largely deserted" when the shelling occurred, and its staff had already left following the earlier violence.

It also voiced concern about the safety of 20 children who the charity believes is still in Thantlang, citing the conflict as a sign of a "deepening crisis in Myanmar".

The United Nations said last week it feared an even greater human rights catastrophe amid reports of thousands of troops massing in the north and west of the country.

In May, government forces used artillery to flush out rebels from the town of Mindat in the southern part of Chin state, and later cut off its water supply, according to a spokesman for a local insurgent group.