Witnesses in Somalia say Ethiopia is moving tanks and other reinforcements into the area where Somalia's Islamists have been battling pro-government troops.
The International Committee of the Red Cross says dozens of people have been killed and at least 200 wounded during four days of fighting in southern Somalia.
The Islamists and the Ethiopian-backed government each claim to have killed hundreds of the other side's troops
U.N. Secretary-General Kofi Annan and the U.N. Security Council denounced the fighting in statements Friday. They urged Somalia's interim government and Islamists to resume peace talks.
U.S. Secretary of State Condoleezza Rice stressed the importance of bringing East African peacekeepers into Somalia during a meeting with Uganda's foreign minister, Sam Kutesa, Friday. Uganda is the only country so far to agree to take part in the force.
The United Nations has passed a resolution supporting the proposed force. However, Somalia's Islamists have denounced the measure and vowed to fight any foreign troops.
Islamist forces have seized much of southern and central Somalia since taking control of the capital, Mogadishu, in June.
This week's fighting has taken place near the interim government's headquarters in Baidoa. Somalia's government has little power outside the town.
Islamist leaders had threatened to attack Ethiopian troops this week if they did not leave Somali territory. Ethiopia has an undetermined number of soldiers in Somalia to assist the interim government.