Hundreds of Ethiopian troops began patrolling the town of Baidoa in armoured vehicles Thursday, less than a day after Islamic militants moved closer to the base of the weak, United Nations-backed government.
The move was greeted by harsh words from the militants, who have been trying to take over Somalia and install a fundamentalist regime.
"We will declare jihad [holy war] if the Ethiopian government refuses to withdraw their troops from Somalia," a top Islamic official, Sheik Sharif Sheik Ahmed, told the Associated Press.
The neighbouring countries are traditional enemies, but Somali President Abdullahi Yusuf Ahmed is allied with Ethiopia and has asked for its support.
The Ethiopian soldiers arrived Thursday afternoon in Baidoa, 240 kilometres northwest of Mogadishu. The troops have set up camp near the transitional president's home, residents said.
"People were prevented from walking on the road that leads to the building," one resident said on condition of anonymity because of fears of reprisals.
Somalia has been without an effective central government since warlords toppled dictator Mohamed Siad Barre in 1991 and then turned on each other, carving much of the country into armed camps ruled by violence and clan law.
Fears of Taliban-style government
The Supreme Islamic Courts Council militia seized Mogadishu last month and installed strict religious courts, sparking fears that it was a Taliban-style regime.
The United States has accused the militia of links to al-Qaeda that include sheltering suspects in the deadly 1998 bombings of U.S. embassies in Kenya and Tanzania.
The advance on Baidoa had prompted the government to go on high alert and neighbouring Ethiopia to declare it was prepared to invade Somalia to defend the government.
The U.S. State Department said it was "gravely concerned" by Wednesday's developments.
Earlier Thursday, a senior executive council member said militiamen that had moved near Baidoa would pull back. Abdirahman Janaqaw, deputy chairman of the council, said it was not immediately clear if the withdrawal had begun.
Somalia invaded Ethiopia in 1978 in an attempt to grab land occupied by ethnic Somalis. Since then, Ethiopia has attempted to influence Somali politics to prevent another invasion.
Ethiopia sent in troops in 1993 and 1996 to crush Islamic militants attempting to establish a religious government.
Hundreds of Ethiopian troops have been spotted in recent weeks along the border between the countries â€” troop movements that the Islamic militia repeatedly has denounced.