The Xogogal newspaper said that the southern port town of Kismayo, as well as Balidogle airport 90 kilometers (55 miles) west of Mogadishu, seemed to be the prime targets of the Ethiopian military offensive.

A large group of Ethiopians crossed the border on Tuesday at Dollow point in Gedo region, according the newspaper.

Ethiopian troops are reported to have backed the Rahawein Resistance Army (RRA) armed faction when it recaptured the south-central of Baidoa from Aidid's forces on June 6. The town had been occupied by Aidid's militiamen for four years.

Five days after losing Baidoa, Aidid's fighters and those of the Somali National Front (SNF) faction seized Kismayo from local warlord Mohamed Said Hirsi "Morgan".

Ethiopian troops attacking Aidid's forces in Kismayo would be backed by Somali guerrillas led by General Abdurahman Khalif Dhi'is, while RRA would fight alongside the Ethiopians during an assault on Balidogle, according to Xogogal.

Dhi'is is the deputy chairman of a conglomeration of Absame subclans who inhabit the Juba river valley of southern Somalia.

Aidid is meanwhile busy mobilising his forces to counter the planned Ethiopian assault, militia sources in Mogadishu said.

Fighters of the south Mogadishu strongman are backed by members of the Ethiopian rebel group, the Oromo Liberation Front (OLF), the militia source said.

But Aidid told AFP on Monday that his defence units did not include any foreign troop and accused Ethiopia of using the presence of OLF fighters in his territory as a pretext to invade Somalia.

He also denied that he was receiving arms from Eritrea, which is fighting a border war with Ethiopia. Addis Ababa and several Somali factions have accused Eritrea of supplying weapons to Aidid since January.

People living in villages around Balidogle have fled the the area to the relative safety of Mogadishu and other towns in southern Somalia, fearing that a major military confrontation in the area was imminent, local humanitarian groups said.

Witnesses, speaking to Reuters in Mogadishu by radio, said up to 2,500 Ethiopian soldiers backed by heavy equipment had been trucked through the border town of Lug in the Gedo region and had entered the Bakool and Bay regions.

SNF spokesman Ibrahim Jama Howleh said: ``It is not fair for Ethiopia to continue its destruction of Somalia. It is the Somali that helped built the regime of (Ethiopian Prime Minister) Meles Zenawi.''

There was no immediate comment from Ethiopia.

Hussein Aideed, Somalia's most powerful warlord, has been the main loser in the recent escalation of an eight-year war in the country but he insists he will bounce back and force invading Ethiopian troops out.

The former U.S. Marine said in an interview he was determined to win back the central breadbasket regions of Bay and Bakool, where his forces were routed last month by an alliance of Ethiopian troops and a rival Somali militia.

``We will never accept the loss of one inch of our land,'' Aideed told Reuters. ``The regions which Ethiopia is occupying, we definitely have a policy to defend, to remove them and take them out of our country.''

Ethiopia has sent an estimated 3,000 troops into Somalia to attack Aideed's forces because he backs the Oromo Liberation Front -- an Ethiopian rebel group with bases in Somalia -- and he is now being armed by Eritrea, which is at war with Ethiopia.

The rivalry between Ethiopia and Aideed's militia stretches back for years, but when they fought their first battle last month in the central city of Baidoa Aideed suffered a humiliating defeat. Ethiopian troops and a local militia combined to pound Aideed's positions with heavy artillery and force his fighters to flee, ending their four-year occupation of the city.

Diplomatic sources say Ethiopia's offensive could actually help Somalia's long-term prospects of peace by forcing Aideed to drop his ambitions of ruling the entire country and instead make concessions allowing rival factions regional autonomy.

But Aideed, 36, does not appear ready to back down.

Speaking in the Kenyan capital Nairobi, he told Reuters that all Somalia's main political leaders supported him and were united in opposing Ethiopia. He also dismissed the idea, which has won international support, of giving Somalia's major clans substantial autonomy in the areas they control.

``This is not practical. Somalis are one ethnic group, united in one language,'' said Aideed. ``It is our destiny to have a united government. It is the will of the Somali people.''

He said he wanted to negotiate peace with Ethiopia and was appealing to the international community to pressure the Ethiopian government into withdrawing its army. But he also warned that Ethiopia had most to lose if it refused to pull out.

``There is no way Ethiopia can exist without peacefully co-existing with us,'' he said, adding that five million ethnic Somalis live inside Ethiopia and any all-out war against Ethiopia's army ``will go beyond the border of Somalia.''

``Definitely, the last losers will be Ethiopians because they are the most fragile,'' he said. ``There is no country in this region, I can tell you, that can affect us. We are professionals when it comes to war.''

Aideed lived for many years in California and, as a Marine, was part of the U.S. forces which landed in Mogadishu in 1992 in an ill-fated effort to bring peace to the Horn of Africa nation.

Ironically, it was Aideed's father Mohamed Farah Aideed who humiliated the U.S. military in a series of fierce street battles and did most to force the international coalition to pull out of Somalia.

Hussein Aideed took over leadership of the Somali National Alliance militia following his father's death in August 1996 and has his main power base in south Mogadishu.

His closest foreign allies are Eritrea, Libya and Egypt and he has visited all three over the last month to ask for help in pushing back Ethiopian forces.

But Aideed flatly denied receiving huge arms shipments from Eritrea in much the same way as Ethiopia's allies inside Somalia say there are no Ethiopian troops in the country.

Diplomats and military analysts say there is no question that both Ethiopia and Eritrea have sent troops and guns into Somalia as an extension of their own border war.

Aideed played down the continuous inter-clan violence that has torn apart Somalia over the past eight years and said he had won over almost all the nation's faction leaders, even those who had opposed his father.

Aideed and another major faction which runs north Mogadishu last year agreed to set up a joint administration in the capital and the level of violence has since declined.

But they have so far been unable to reopen the port and airport -- a key goal of the agreement -- and the city is still plagued by sporadic street battles, tit-for-tat murders, kidnaps and crime.