The United Nations office in Myanmar said it was “deeply concerned” by reports of civilian casualties in the attack.
“IDP camps are places of refuge and civilians, wherever they are, should never be targets,” it said.
The British Embassy in Yangon said it was “shocked by reports of Myanmar military attacks” that killed civilians.
An AFP journalist in Laiza said artillery fire around the town could be heard all day Tuesday.
Later, local people and KIA soldiers conducted a mass burial of those killed in the attack.
The crowd sang Christian hymns as the wooden coffins were placed in the ground.
Some family members cried and offered flower garlands before the diggers poured soil over the resting places.