Sheikh Hassan Dahir Aweys told The Associated Press in an interview by telephone from Mogadishu, Somalia's capital, on Wednesday: "Let's talk means let's make peace.
"We expect to reach a solution because it is a known fact that if Somalis talk to one another they can make peace."
Muslim groups loyal to Aweys have taken up positions on three sides of the only town the internationally backed government controls, prompting fears of renewed civil war and a possible regional war drawing in Somalia's neighbours.
Ethiopia has sent advisers to train the government's military, while Ethiopia's rival Eritrea is believed to be supporting Aweys's movement.
Two regional organisations have tried to start peace talks.
Aweys met on Monday with Sharif Hassan Sheikh Aden, the speaker of the transitional parliament, who flew to Mogadishu after peace talks in Sudan failed to even start.
Aden's initiative, though, wasn't supported by his government.
"We are not attacking the Somali government ... Ethiopians are the ones attacking us, we are on defence"
Sheikh Hassan Dahir Aweys, senior leader of Somalia's Council of Islamic Courts
The international community has expressed support for the transitional government, which controls only Baidoa, 250km northwest of Mogadishu.
Aweys's movement has taken control of most of southern Somalia and demanded a new Islamic government.
Both Aweys's movement and the government have massed troops outside of Baidoa and there have been reports of skirmishes north of Mogadishu, stoking fears of all-out war.
While Ethiopia has acknowledged sending a few hundred troops to help the transitional government, Aweys said there are thousands of Ethiopian soldiers in the country in what he calls an invasion.
Ethiopia has accused its longtime rival Eritrea of sending thousands of troops to help the Islamic Courts group attack Ethiopia, something Aweys denies.
A confidential UN report obtained by the AP last month said 6,000 to 8,000 Ethiopian soldiers were in Somalia or along their border, and 2,000 Eritrean troops were in Somalia. Eritrea denied having any soldiers Somalia.
"Ethiopia has to stop its interference in Somalia," Aweys said.
"There are no foreigners among us and we don't need them. We have sufficient Somalis and our troops are Somali citizens."
Aweys, who appears on US and UN lists of people with alleged terrorist ties, denied that his troops' continued advance threatened the government.
Aweys: "We are preparing for a war because foreign troops are in our country."
"We are not attacking the Somali government ... Ethiopians are the ones attacking us, we are on defence."