Google News - Ethiopia on Tuesday pressed on with its offensive against Somali Islamists and threatened to seize the Somali capital, Mogadishu.
At least two Ethiopian jets fired missiles on retreating Islamist forces, prompting the interim Somali government to claim a partial victory.
Hundreds of troops have been killed during a week of heavy artillery and mortar fighting amid fears that it could spark a wider regional conflict in the Horn of Africa.
"Ethiopian forces are on their way to Mogadishu. They are about 40 miles away and it is possible they could capture it in the next 24 to 48 hours," Somalia's ambassador to Ethiopia, Abdikarin Farah, told reporters in the Ethiopian capital, Addis Ababa.
But the Islamists, who insisted their withdrawal was "tactical", warned that any attempt to take Mogadishu would end in disaster for the attackers.
"It will be their destruction and doomsday," the Islamist spokesman Abdi Kafi said. "We will fight to the last man until we ensure there are no more Ethiopian troops in our country."
The Islamists, who hold most of southern Somalia after seizing Mogadishu in June, claim broad popular support and say their main aim is to restore order under sharia law after years of anarchy since the 1991 ousting of the dictator Siad Barre.
Ethiopia, which fears a hardline Muslim state on its doorstep, accuses the Somalia Islamic Courts Council (SICC) of wanting to annex Ethiopia's ethnically Somali Ogaden region. Addis Ababa has sided with the internationally recognised, but weak, transitional government, based in Baidoa.
Diplomats fear the fighting will draw in Eritrea on the side of the Islamists.
"What is happening in Somalia is very, very dangerous and will have consequences in the Horn," the Eritrean information minister, Ali Abdu, told Reuters in Asmara.
The African Union (AU) has backed Ethiopia's right to intervene in what has been seen as a potentially significant endorsement that may further embolden Addis Ababa.
The AU deputy chairman, Patrick Mazimhaka, told the BBC that Ethiopia had given the organisation - set up to stop conflicts across Africa - "ample warning" that it felt threatened.
"It is up to every country to judge the measure of the threat to its own sovereignty," he said. Diplomats say Kenya, which is taking in a flood of Somali refugees across its northern border, is working behind the scenes to broker ceasefire talks.
Thousands of Somali Islamist fighters crammed into camouflage-painted trucks mounted with anti-aircraft guns headed out from Mogadishu and elsewhere to reinforce their comrades beaten back from frontlines around the south central town of Baidoa.
The air strikes at Leego and Jama'ada - east of Buur Hakaba, a town recaptured by pro-government forces today - marked the third day of such attacks by Ethiopian planes.
After the Islamist withdrawal, residents and local militiamen looted Buur Hakaba, 20 miles east of Baidoa, stealing boxes of food and medicine, witnesses said.
"The town is in total chaos," said the resident Adan Hassan.
Analysts say Ethiopia's heavy arms and MiG warplanes helped them halt an initial Islamist attack and saved the transitional government from being driven out of Baidoa.
"This is the first stage of victory ... When this is all over, we will enter Mogadishu peacefully," the Somali government spokesman Abdirahman Dinari told Reuters by telephone from Baidoa.
Despite its hopes for a quick win, the transitional government fears renewed assaults or a guerrilla campaign, particularly from hardliners within the SICC.