According to the newspaper, Kamoli is suspected of being holed up in the area with about 200 soldiers and is believed to have artillery trained on the capital, Maseru.
It has emerged that South African policemen are also protecting the Lesotho prime minister and the country’s executive.
However, it is feared however that the tiny mountain kingdom is on the brink of a civil war, reports the Sunday Times.
Intervention on the part of South African special forces to get Kamoli to hand himself over have so far failed. Instead the former army chief plundered two armouries in Maseru, taking artillery, armoured vehicles, anti-aircraft and anti-tank weapons and mortars.
The rebel army reportedly consists of 40 veteran special forces members and 160 recruits trained by special forces.
As reported by News24, a top Lesotho military commander has said that Kamoli refused to step down as the commander of the Lesotho Defence Forces.
"He has refused to vacate offices and depleted armouries," Lieutenant General Maaparankoe Mahao said, adding the materiel was being used to prepare for "defensive and offensive" operations.
"Intelligence reports indicate he slips in and out of the mountains," Mahao added.
Prime Minister Tom Thabane asked Kamoli to relinquish his command a week ago.
Within hours of that order the military had attacked a host of police stations and Mahao - Kamoli's successor - had been the target of an attempted assassination. Thabane later fled to South Africa.
Intelligence sources say Kamoli has control of Lesotho's elite special forces unit of around 40 highly-trained troops, as well as the military's intelligence division.
Police said that during the attacks on their bases the military hunted for case files against Kamoli and other soldiers relating to corruption and a series of politically-motivated bomb attacks.
The military denies trying to stage a coup and says it raided police offices to get weapons it believed would have been given to "political fanatics".