The denial came after the Somali government's ambassador to Ethiopia said on Wednesday that the Islamist union was planning to capture Kismayo in the south of the East African country.
Abdikarim Farah, told Reuters on the sidelines of an African Union meeting in Addis Ababa: "The Islamic Courts' forces are marching to occupy Kismayo.
"This is a challenge to the TFG [Transitional Federal Government]... The Islamic Courts are not going to succeed by choosing military means, it has to renounce this option."
Kismayo is the largest port in the south. It is controlled by an independent militia, the Juba Valley Alliance - led by Colonel Abdikadir Adan Shire, who is also known as Barre Hiraale. Shire is the present defence minister.
Islamists deny advance
Members of the union, speaking from their stronghold in the capital, Mogadishu, said they knew of no plan to take Kismayo.
Kismayo is the largest Somali port south of Mogadishu
Bedri Hashi, the group's information officer, said: "I am not aware of any such militia movements. We have no plans to attack Kismayo or any other place.
"That man [Farah] is speaking on behalf of Ethiopia."
However, some sources said the movement had approached Shire in the past month and urged him to hand over Kismayo, pointing out that many of the militias protecting it are members of clans that have worked closely with the Islamists.
The Juba Valley Alliance said the militia reported to be moving towards Kismayo was associated with its forces but were also working with the Islamic Courts Union.
Bile Abdulle, the spokesman for the Juba Valley Alliance, said: "The troops said to be advancing towards Kismayo are led by our deputy chairman and the head of security.
"We have a working relationship with the Islamic courts."
The Somali government, known as the Transitional Federation Government (TFG), is internationally recognised but is weak and its control of Somalia barely extends further than the inland town of Baidoa where it is based.
Ethiopia backs the TFG and has accused the Islamic Courts Union of sheltering "terrorists".
Since taking control of Mogadishu earlier this year, the union has steadily expanded its control over other parts of the country.
In August, it took Hobya, another key port.
African Union plans mission
The African Union has approved a plan to send 8,000 African peacekeeping troops into Somalia to protect the Baidoa-based government.
"We have adopted the totality of the plan, with all its provisions," Said Djinnit, the AU commissioner for peace and security, said on Wednesday.
"Now, we have to find the money. The problem now is how to mobilise the resources for the budget."
Osama bin Laden, al-Qaeda's leader, has warned that sending international troops to Somalia would justify a jihad by Somali Muslims - a warning also previously sounded by senior members of the Islamic Courts Union.
Djinnit said the AU would ask the European Union and others for help raising the estimated $335 million needed for a peacekeeping deployment for one year.