Ethiopian troops Saturday entered a second town in Somalia, and took control of a key airport.
Witnesses say about 200 troops entered the town of Wajid, about 100 kilometers south of the Somali-Ethiopian border.
There are no reports of fighting.
Somalia's Islamists control the traditional capital Mogadishu. They said Saturday they will not participate in talks with the secular interim government because Ethiopian troops have entered Somalia to support it.
The talks were to take place Saturday in Khartoum, Sudan. They were aimed at preventing armed conflict between the secular government and the Islamists.
Ethiopian soldiers first crossed the border on Thursday and entered Baidoa, the southern base of Somalia's interim government. They arrived a day after Islamic militiamen briefly moved to within 40 kilometers of Baidoa.
Addis Ababa denies it has sent its troops into Somalia.
The head of the Islamic Courts Council, Sheik Hassan Dahir Aweys, on Friday declared a holy war against Ethiopia, its traditional enemy.
Hundreds of demonstrators staged anti-Ethiopian protests in Mogadishu on Friday.
Somalia's transitional government has international backing but little influence outside Baidoa.
In contrast, the Islamists have enjoyed growing power. Fighters loyal to the sharia (Islamic) courts have taken control of much of southern Somalia. The courts have moved to implement a strict form of Islamic law in the areas under their command.
Ethiopia is a mostly Christian nation. It warned earlier this week that it was prepared to invade Somalia to defend the secular government.
Some information for this report was provided by AP and Reuters.