Fear of an all-out war in the Horn of Africa is soaring amid reports that Somalia's Islamist militia and Ethiopian-backed government troops are creating front-line, fighting positions near the Islamist-controlled town of Bur Hakaba and the collapse of peace talks between the two sides.

Somalia veteran soldiers parade in former government headquarters in south Mogadishu

Witnesses in Moote Moote, a village just outside Bur Hakaba, say hundreds of civilians have fled their villages in the past three days, as an increasing number of heavily armed Islamist fighters have arrived in the area.

Nearby, in the government-held town of Deynunay, residents say that government troops and reinforcements have been sent there in recent days to defend the 22-kilometer road from Bur Hakaba to the government seat in Baidoa.

VOA has not been able to independently confirm reports that an unknown number of Ethiopian troops are also in Deynunay to support the government troops. 

Earlier this week, a crucial third round of peace talks in Sudan, aimed at convincing the weak government in Baidoa and powerful Islamists in Mogadishu to open a dialogue for a power-sharing agreement, failed to take place, partly because the Islamists first demanded the withdrawal of Ethiopian troops from Somalia.    

Since the Islamists took power in Mogadishu in June and began expanding their power throughout southern and central Somalia, Ethiopia has repeatedly denied allegations that it has deployed troops to Somalia to protect the country's weak, secular government in Baidoa. 

But Christian leaders in Addis Ababa, who say Islamist leaders in Mogadishu are led by extremists with ties to terrorist organizations, have also said that they would not tolerate the establishment of a fundamentalist Muslim theocracy in Somalia.  

On Friday, thousands of angry protesters in Somalia's Lower Juba region marched through the streets, calling for a holy war against neighboring Ethiopia.  They allege that Ethiopia and its allies, Kenya and the United States, purposely derailed the peace talks in Khartoum in order to attack Islam in Somalia.

Hard-line Islamist leaders in Mogadishu also dismissed a U.S. warning that extremists in Somalia may be planning suicide attacks against Americans in Kenya and Ethiopia.  The Islamists' deputy defense chief, Muktar Robow, called the warnings "baseless" and said it was part of a propaganda aimed at destabilizing the Muslim world.

Embassy officials in Nairobi and Addis Ababa say the warning, issued on Thursday, was in response to postings on Somali Internet Web sites, allegedly written by the leader of the Somali Islamist group, Sheikh Hassan Dahir Aweys.   On the Web sites, Aweys, who is on a U.S. list of terror suspects, is reported to have authorized suicide attacks on prominent targets in both east African countries.    

In Nairobi, Kenyan police spokesman Gideon Kibunja tells VOA that the threat of suicide bombings is being taken very seriously.

"Definitely, we will increase surveillance of the kinds of people who are likely to do that," he said.  "We will increase surveillance on likely targets, and generally, we will be more vigilant."

Kenya and Ethiopia, as well as the United States, favor the deployment of regional peacekeepers to help the threatened government in Baidoa.  The Islamists have said such a move would be considered a declaration of war.