Ethiopia has strongly denied reports of a fresh incursion into Somalia, five months after calling off an unpopular two year military incursion to prop up the government in Mogadishu. Ethiopian and Somali officials are calling the reports 'propaganda'.

Government spokesman Bereket Simon says Ethiopia has no intention of sending soldiers back to Somalia.

Ethiopian troops invaded their Horn of Africa neighbor in 2006 to support the country's weak transitional government. They pulled out early this year, after it became clear rebel groups were taking advantage of long-standing anti-Ethiopian sentiment to expand their public support.

Spokesman Bereket last week said there had been small 'reconnaissance missions' by Ethiopian scouts across the border in an area controlled by the extremist group al-Shabab. But speaking to reporters Saturday, he flatly rejected news reports that battle wagons full of heavily-armed troops had occupied a town in central Somalia.

"[The] fact on the ground is that Ethiopia is within its border," said Bereket. "We don't have any decision to enter back to Somalia. When we decide, we will tell to the world, that we have decided to enter that based on our national interests. But now we don't have that decision, and we haven't moved an army."

Somalia's Ambassador in Addis Ababa, Said Noor, called reports of an Ethiopian incursion 'propaganda' disseminated by agencies controlled by the hardline al-Shabab rebel group. The envoy pointed to the number of Somalia journalists killed in recent weeks, and said 'they live in fear if they go against al-Shabab'.

News agencies quoted residents Friday as saying Ethiopian troops were setting up positions in Balanbale, a town just inside Somalia's border, which has been the scene of fighting between rebels and a pro-government militia. The reports could not be independently confirmed.

Spokesman Bereket suggested the reports were part of a rebel attempt to rekindle the anti-Ethiopian feelings that won them popular support in the past.

"I think the reason is, the extremists who are losing ground, to a certain extent feel they can mobilize people by just presenting such Ethiopian intervention or that kind of things to the public. that's why they are using this as a scarecrow to get support," he said.

Somalia has been considered a failed state since 1991, when dictator Mohammed Siad Barre was overthrown. Eighteen years of lawlessness has given rise to piracy off Africa's longest coastline, as well as illicit business on shore.

Insurgent groups control much of the southern and central parts of the Horn of Africa nation, while forces loyal to President Sheikh Sharif Sheikh Ahmed command significantly less territory, and only small parts of the capital, Mogadishu.

The United Nations Thursday appealed for more aid to Somali refugees who have fled to neighboring countries to escape fighting between rebels and government forces. U.N. officials estimated 3.2 million people, or 43 percent of Somalia's population, are in need of humanitarian aid