Fighting overnight in Somalia's capital has continued into Wednesday morning threatening a lasting ceasefire.

A resident Zamzam Abdulrahman told the BBC heavy shelling was taking place in Fagah in northern Mogadishu.

Two people died in the clashes as talks between clan elders and Ethiopian commanders were delayed again.

But a Hawiye clan spokesman said a more hardliner faction has agreed to join the talks to end tension between Ethiopia and Islamist and Hawiye fighters.

More than 1,000 people died in recent battles between the two sides.

The United Nations refugee agency says some 124,000 people have fled Mogadishu following the heaviest fighting in 15 years.

The Union of Islamic Courts (UIC) was driven out of Mogadishu last December by an alliance of Somali transitional government forces and Ethiopia.

Threat unclear

"Mortars fired from the presidential palace are landing on residential areas and many people are fleeing towards Lido beach which is not targeted," Ms Abdulrahman told the BBC News website.

Earlier, Hawiye clan spokesman Hussein Adan Korgab said talks between elders and Ethiopian commanders had been put off for a third time after an influential group that was opposed to the process accepted to join in.

Mr Korgab told journalists in Mogadishu that the fourth phase of the ceasefire talks was now scheduled to take place on Sunday.

Observers say it is unclear whether the fresh fighting will affect the planned ceasefire talks.

On Tuesday, fears of imminent fighting were high after both sides began digging trenches across their strong holds.

Meanwhile, Eritrean President Isaias Afewerki has met one of the top leaders of the UIC, Sheikh Sharif Ahmed .

It is the first time Eritrea, Ethiopia's regional rival, has publicly acknowledged the presence of Somali Islamists on their soil.

The US has accused Eritrea of trying to destabilize the Horn of Africa by supporting the Islamists but Eritrea rejects this.

Last week, US assistant secretary of state for African affairs held a meeting with the Somali president and prime minister and called for a permanent ceasefire to be achieved through dialogue between the interim government and affected communities.

African Union (AU) troops are supposed to be replacing the Ethiopian soldiers but so far only 1,200 Ugandans have arrived, of the planned 8,000-strong force.

Photo caption

Somalis carry a wounded relative