Witnesses said mortars and bullets were flying in various parts of south Mogadishu on Thursday, as militia linked to Islamic courts resumed fighting an anti-terrorism coalition of regional commanders.
The battle for control of Mogadishu has been on-and-off between the two groups since the turn of the year, killing at least 270 people, but the earlier fighting had been in the city's north.
Residents said that it spread to southern districts early on Thursday.
Witnesses said scores of residents were fleeing from the fighting, and the streets were full of terrified old people and children.
Both sides confirmed the fighting. Ibrahim Maalim, a coalition member, described the fighting as very heavy.
"They are hitting each other with mortars, anti-aircraft missiles and anti-tanks.
"I have never seen such a heavy exchange. Mogadishu is blazing with fire," he added to Reuters, as heavy artillery and gunshots reverberated over the telephone.
"There are bodies lying everywhere. I cannot count them and there are wounded people lying on the streets crying for help."
"I have never seen such a heavy exchange. Mogadishu is blazing with fire"
Maalim said the militia of the Islamic courts had pushed the alliance out of a hotel owned by one of its members in a junction connecting the capital's main roads.
Ahmed Mohamed, a leader of an Islamic youth organisation which supports the courts, said: "The owner of the Sahafi hotel is a member of the alliance, that is why we seized the hotel and its surrounding areas".
Witnesses said they saw Islamic militia set ablaze a coalition vehicle. Others saw the bodies of three Islamist fighters on a pick-up armed with heavy guns.
This year's fighting in Mogadishu has been the worst for years in Somalia, which has been without a functioning government since Mohamed Siad Barre was toppled in 1991.
The militia linked to the Islamic sharia courts say their enemies, the regional commanders, are being funded by the United States, an accusation that is believed by many Somalis and some analysts.