Somali President Abdullahi Yusuf appointed a new prime minister Tuesday despite parliament's rejection of his decision to dismiss the current prime minister.
The president named close ally Mohamed Mohamud Guled as prime minister to replace Nur Hassan Hussein.
Kenya's government, which chairs the regional body spearheading Somalia's peace process, immediately rejected the move. The Kenyan foreign minister, Moses Wetangula, said he was looking into imposing sanctions against Somali leaders, including possible travel bans and freezing assets.
Kenya said Mr. Hussein should stay on as prime minister.
Mr. Hussein received a strong vote of confidence from Somalia's parliament Monday, a day after the president said he was firing him for corruption and inefficiency.
The political power struggle comes as Somalia tries to deal with a powerful Islamist insurgency and piracy off its coast.
Monday, the European Union and the African Union said it would be unacceptable for internal disputes to jeopardize the difficult peace process with Islamist insurgents.
The government recently reached a peace deal with a moderate Islamist group, the Alliance for the Re-Liberation of Somalia. But hardline Islamists rejected the deal and have continued taking over towns in the country's center and south.
Fighting over the last two years, involving Ethiopian-backed government forces and a variety of Islamist groups, has killed thousands of Somalis and displaced at least a million others.
Some information for this report was provided by AFP and Reuters.