Burmese troops attacked a Kachin base just a few kilometres from Laiza, the capital of Kachin state, near the Chinese border.
Hundreds of Burmese troops could be seen crawling through the trees up the slopes, says the BBC’s Jonathan Head.
Kachin fighters are fighting for greater autonomy in Burma.
The base was hit by sustained mortar and artillery fire, our correspondent, who is in the area, says.
If the base falls, there are few defences left to prevent the fall of Laiza, should the Burmese military decide to take it, he adds, and a Burmese military advance would certainly force the flight of many thousands of civilians.
The government announced a ceasefire on Friday, but the Kachin Independence Army claimed that attacks continued regardless.
The Kachin Independence Army is the only major ethnic rebel group not to have agreed a long-standing ceasefire with the government.
The rebels are seeking greater autonomy within Burma for ethnic Kachins who have had de facto control over a part of northern Burma for more than 50 years.
Burma’s new military-backed civilian government has pledged to resolve conflicts in border areas with ethnic minority groups.
But the Burmese army began a new offensive last month, after a 17-year truce with the rebels ended in mid-2011.
The latest fighting flared after the Kachin rebels refused to stop attacking Burmese army convoys delivering supplies to a base near Laiza.
On Sunday the Burmese president Thein Sein repeated his call for dialogue with rebels to resolve the long-running conflict.