The fighting started at dawn on Monday (local time) when militants from Ansar al-Sharia (Partisans of Islamic Law) attacked the camp in Abyan province, about 120km from southern port city Aden.
The group seized control of a significant amount of territory in Abyan during the turmoil that led to the replacement of President Ali Abdullah Saleh by his deputy, a deal that Saudi Arabia and the United States hope will prevent al Qaeda from getting a foothold near key oil shipping routes.
Conflict with Islamists in the south is only one of several challenges facing new president, Abd-Rabbu Mansour Hadi, who took office vowing to fight al Qaeda, only to have more than 100 soldiers killed in attacks during his first few days in power.
Twenty-seven fighters were killed in Monday's clash with the army and five when warplanes bombed a checkpoint they were holding, officials and residents said. Eighteen soldiers, an army colonel, and six pro-government tribesmen were also killed.
A military official said the army drove the fighters away from the area around the camp. The militants said in an emailed statement that none of their fighters was killed in the clash, and threatened to attack Lawdar.
Intermittent gunfire was heard throughout the afternoon while the military carried out a second air strike, but no casualties were reported, officials and residents said.
Mohammed Nasser, a resident of Lawdar, speaking by telephone with the sound of artillery and small arms fire audible, said the fighting lasted three hours.
A local official said tribal militiamen joined the fighting alongside the military, and that at least 10 soldiers and tribesmen were wounded.
"We ask for the state and the army to provide us with heavy weapons because we are fighting with our own personal arms and the other side has advanced weapons like RPGs (rocket-propelled grenades) and bazookas," said Ali Ayda, a tribal fighter. "We will not surrender our town until death."
Washington, which has pursued a campaign of assassination by drones and missiles against alleged al Qaeda targets in Yemen, wants Hadi to reunify a military that split between Saleh's foes and allies last year, and focus it on "counter-terrorism".
Yemen's main airport in the capital Sanaa was paralysed for a day after Hadi sacked the air force commander, a relative of Saleh, on Friday, and pro-Saleh officers responded by blockading the airport with vehicles.
A government official said they backed down only after warnings from the United States and Gulf countries which crafted the deal that made Hadi president.
In Sanaa, a military committee tasked with restructuring the armed forces oversaw the evacuation of troops and dismantling of some checkpoints belonging to rival divisions of the military, an official said.
The official, who asked not be named, said checkpoints controlled by the Republican Guard, led by Saleh's son, and renegade general Ali Mohsen al-Ahmar were being dismantled.
Separately, unidentified gunmen attacked a military checkpoint in Aden, killing two soldiers, a security official said. He gave no further details.
The country's top oil committee, chaired by Prime Minister Mohammed Basindwa, met on Monday to decide crude oil exports in June, the state news agency Saba reported.
China's Unipec, the trading arm of top Asian refiner Sinopec Corp, won a bid to buy 100,000 barrels a day of Masila crude in June, the agency said. (Writing by Joseph Logan and Mahmoud Habboush; Editing by Louise Ireland and Alison Williams)
