The African Union and Western countries are pushing ahead with plans to send foreign peacekeepers to Somalia.
African Union officials say African and Western diplomats agreed to send experts to assess conditions in Somalia before deploying a peacekeeping mission.
European Union envoy Tim Clark said diplomats fear the East African country's situation could unravel quickly without, what he called, a "muscular response."
Tensions have increased in recent weeks, since militias vowing to impose Islamic rule took over Mogadishu, the country's capital. A group called the Union of Islamic courts is in control of the city and has voiced strong objections to a foreign peacekeeping force.
On Sunday, fighters loyal to the courts made their latest move to impose Islamic law, shutting down public movie houses in the city of Jowhar. Meanwhile, the head of the Islamic courts, Sheik Sharif Ahmed, accused Ethiopia of sending troops across the border, a charge Ethiopia denied.
Ethiopia and Somalia have had a rocky history since they fought a war more than two decades ago.
Ethiopian troops could be included in a regional peacekeeping force the transitional Somali government recently approved to restore law and order, but most Somalis oppose Ethiopian troops being part of the force.
Horn of Africa expert at the University of South Africa Professor Iqbal Jhazbhay tells VOA that he has heard unconfirmed reports Ethiopian troops have massed along the border and may have entered Somalia.
He says he thinks the transitional government, headquartered in the town of Baidoa, does not want people to know about the possible presence of Ethiopian troops in Somalia, because people may side with the Islamic Courts. He says the government is afraid the Islamic Courts could expand into Baidoa and unseat the transitional leaders.
"The Islamic groups are aware of this strong sense of people not wanting Ethiopians on their territory, so they played on that sense very strongly," said Iqbal Jhazbhay. "If reports and discourses go out that the Ethiopians are in the territory, that similar sense will be mobilized amongst the people, and you are like to see that they [Islamic courts] are likely to take over Baidoa after that."
Meanwhile, the Shabelle Media Network reports militias loyal to the transitional government attacked the Shabelle Radio Station on Saturday and arrested two journalists because they reported Ethiopian troops had entered Somalia. The reports have not been confirmed by government sources.
Since civil war broke out in 1991, militias loyal to clan and sub-clan-based factions have controlled different parts of the country, with no central authority to provide law and order and even basic services to the population. Since February, more than 350 people have died in fighting between the Islamic militias and Somali warlords.
The transitional Somali parliament was formed in Kenya more than a year ago following the peace process.