Fighting, which many believe is being fuelled by US support for the commanders of the newly formed Alliance for the Restoration of Peace and Counter-Terrorism, continued for a third day on Tuesday in the run-down Siisii area of Mogadishu.
The alliance was fighting members of an Islamic militia linked to Mogadishu's Sharia courts and funded by local businessmen. The two sides are competing for control of the capital.
Washington has long viewed mainly Muslim Somalia as a potential haven for militants, and it is thought by many both inside and outside the nation to be sending money to the Mogadishu commanders.
Even Somalia's interim president, Abdullahi Yusuf, said last week Washington was backing the commanders.
Abdifatah Abdikadir, a resident who witnessed an attack on a passing convoy of alliance militia, said: "I am sure 20 people died today and nearly 60 have died so far since the battle began on Sunday."
Somalia has been a battleground for feuding militia since the toppling of Mohamed Siad Barre, the president, in 1991.
But this year's fighting in Mogadishu has been the worst for years. Two previous battles in February and March killed about 90 people.
Siyad Mohamed, an Islamic militia leader, confirmed fighting had started again on Tuesday morning: "We have lost at least four today on our side, and three yesterday."
The violence is a setback to plans by an interim Somali government - the 14th attempt to restore central rule in 15 years - to move from its provincial base Baidoa to the capital.
It is also impeding relief efforts in a nation where nearly two million people rely on emergency food aid. Around Mogadishu, thousands of internal refugees live in squalor in the war-scarred shells of former government buildings.