Mohamed Ibrahim Bilal, an Islamic Courts official, said that the government had launched a counterattack at Rama'addey village, while Ali Mohamed Gedi, the prime minister, claimed that Islamic Courts fighters had attacked government positions.
"The Ethiopian troops along with government troops have counterattacked our militia ... The fighting is going on," said Bilal.
The SICC announced a ban, by radio, on trucks going to Baidoa from Mogadishu in order to cut off the government's food supply.
Calm before the storm
But Salad Ali Jelle, the government's deputy defence minister, said commanders in the field reported no clashes on Saturday.
"War could start any minute because we are so close to each other," he said.
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The UN Security Council this week unanimously approved a controversial resolution backing deployment of peacekeepers in Somalia, ostensibly to stave off conflict between the Western and Ethiopian-backed interim government and the Islamic Courts.
The Islamic Courts strongly opposed the resolution to provide troops to help the government build up its security forces and begin to impose its authority.
The two sides, including Ethiopian troops backing the government, fought on Friday in a neighbouring village along a front line that the Islamic Courts fighters set up to encircle half of Baidoa.
Military experts say that a full-blown war may drag in neighbouring countries.
"War could start any minute because we are so close to each other."
Salad Ali Jelle, deputy defence minister
Ethiopia has denied any involvement, but security experts say the Horn of Africa military power has between 5,000 and 10,000 troops inside Somalia.
The Mogadishu-based Islamic Courts have declared holy war against Ethiopia, whose troops they view as invaders.
A recent report to the UN said at least nine nations were funnelling vast quantities of military hardware into Somalia, a cauldron where many countries have fought their battles by proxy in the 15 years of anarchy since the last president was ousted.
Analysts fear that Ethiopia and Eritrea, which backs the Islamic Courts, will confront each other if their Somali allies go to war.