The Inter-Governmental Authority on Development (IGAD), meeting in Ethiopia's capital Addis Ababa, said the rebels were capitalising on Somalia's porous borders to bring in both weapons and non-Somalia combatants.

It called on the UN Security Council to "impose a no-fly zone, except for humanitarian purposes authorised by the government" and to impose a blockade "on sea ports particularly Kismayo and Merka to prevent the further in-flow of arms and foreign fighters".

The embargo could be enforced by international naval forces currently on anti-piracy operations in waters off Somalia, it said.

The regional grouping also called on the world body to impose sanctions on Eritrea "without further delays" for backing the radical Islamists in their campaign to unseat the Somali transitional government.

Eritrea pulled out of IGAD in April 2007 blaming it for failing to bring peace to the region.

African Union commission chief Jean Ping, who attended the IGAD foreign ministers' meeting, renewed calls for a UN-sponsored peacekeeping force in the Horn of Africa state that has not known peace since 1991.

The situation is "deteriorating ... due to an unprecedented level of violence in Mogadishu," said Ping.

"I wish to once again call on the UN Security Council to authorise the deployment of a fully-fledged peacekeeping mission in Somalia and respond to the threat to the international peace and security."

A UN Security Council delegation over the weekend said conditions have not yet been met for deploying UN peacekeepers in Somalia.

Somali extremist rebels early this month launched an onslaught which has so far left more than 100 people dead and displaced some 45,000 others in less than two weeks.

The latest round of fighting against pro-government militants has been some of the fiercest in months.

"It is no longer a war between Somalis, but a war against Somalia, a war against all of us," IGAD secretary general Mahboub Maalim, said during the talks.

On Tuesday residents said they saw Ethiopian troops in armoured vehicles patrolling a Somali border town.

But Ethiopia has denied crossing back into Somalia, where it previously shored up government troops for slightly over two years since late 2006.

"We are not back in Somalia. We don't intend to go to Somalia unilaterally," Seyoum Mesfin Ethiopia's foreign minister, said.

Seyoum, who chaired the talks in Addis Ababa, warned against delayed intervention to help the embattled interim government.

"It is always more difficult to reverse a dangerous process when it is too late," he said.

"Extremists are not interested in peace. Their agenda has nothing to do with the stabilisation of Somalia. Their plans are going beyond Somalia," he said, adding their leaders "are making it clear that their objectives are not limited to Somalia."