Mukhtar Mohamed, a resident of Fagah in northern Mogadishu, said: "I have seen Ethiopian tanks taking positions and heavily shelling insurgent positions.
"The fighting is heavier [than] yesterday, the rivals are exchanging machine guns, mortar and anti-aircraft fire."
Hussein Said Korgab, the spokesman for the Hawiye clan, Mogadishu's largest, said: "The fighting is very heavy and the casualties are steadily increasing everyday. The Ethiopian forces are hitting civilians indiscriminately."
The clashes, which erupted on Wednesday, have so far killed about 250 people and wounded hundreds others, according to the Elman Peace and Human Rights Organisation which tracks casualty figures.
This week's flare-up alone has displaced at least tens of thousands and destroyed property of massive value, Korgab said.
He said: "At least 70,000 have evacuated their homes. Property worth $500m has been destroyed. The Ethiopian and government forces will take ultimate responsibility for all these mess."
Hundreds of civilians, clutching their personal belongings, took advantage of relative calmness in southern Mogadishu and fled their neighbourhoods.
They are part of an ever-increasing exodus from the city that is now wracked by the worst fighting since 1991, when Mohamed Siad Barre, Somalia's then-military ruler, was deposed.
Bur Dheere, a mother of three, while boarding a packed pick-up truck, said: "We have no place to stay in this town. Everywhere in Mogadishu is the same: death. We are running away until we reach a safer place.
"Everytime news comes, it is bad news of the death. We must leave until we have confirmed that this place is safer for human habitation."
The United Nations says about 321,000 people have fled Mogadishu since February. Many are camped under trees and makeshift hovels in the city's outskirts, without supplies and where disease outbreaks have been reported.
Ethiopian troops helped Somalia's interim government oust the Union of Islamic Courts from the country's south and central regions in January.
|Fighting continues months after the defeat of|
the Islamic courts [AFP]
But since then, fighting has steadily grown worse as the remaining fighters, backed by disgruntled Hawiye clansmen continue to fight, vowing to defeat the interim government and drive out foreign forces from the country.
On Sunday, Ali Mohamed Gedi, Somalia's Ethiopian-backed prime minister, vowed to crack down on the fighters, some of whom are allegedly linked to the al-Qaeda network of Osama bin Laden.
On the Mogadishu-based Shabelle radio, he said: "Until the terrorists are wiped out from Somalia, the fighting will go on."
Mohammed Adow, Al Jazeera correspondent, said there is no sign of any reconciliation between the two sides or a let up in violence.
He said: "Clan elders in Mogadishu have been saying they are not interested in any peace deal ... because they say taht the ones they have signed in the past have not been honoured and have been broken."
Adow said the question on the mind of Somalis is why the international community remains silent about the fighting.
"Many believe that this silence could mean complacency or being in agreement with the massacre that is going on," he said.
Somalia has lacked an effective government ever since Barre's removal from power touched off a deadly power struggle that has defied more than 14 attempts to create a government that can stabilise the country of about 10 million.