Somalia's transitional government says its troops are on high alert after Islamic militiamen deployed near the government's base of Baidoa, Wednesday.
Witnesses and government officials say the fighters, who are loyal to Somalia's Islamic courts, were just 40 kilometers outside the town.
Various Islamic officials in Mogadishu say the fighters do not intend to attack Baidoa.
But Prime Minister Ali Mohamed Gedi has accused the Islamists of violating a non-aggression pact the sides signed last month. He is calling on the Islamists to stop fighting.
Analysts say Wednesday's developments could mark the start of open conflict between the government and Somalia's increasingly powerful Islamic movement.
Islamic fighters have seized control over much of southern Somalia in recent weeks after defeating secular warlords in a battle for the capital.
The transitional government has U.N. backing but little power outside Baidoa. Earlier this week, Somalia's Islamic Courts Council said it was setting up a court in two regions ostensibly under government control.
The Islamists have moved to implement a strict version of Islamic law in areas under their command. On Tuesday, militiamen arrested at least nine people in Mogadishu who were watching videos.
It was unclear how the developments will affect talks between the government and Islamists scheduled to resume this week in Sudan.
Some information for this report was provided by AP and Reuters.