Eritrea's exit has been seen as a blow to diplomatic efforts to unite foreign opinion on pacifying Somalia.
A meeting of Igad foreign ministers two weeks ago in Kenya did little to help the disagreement between Ethiopia and Eritrea, bitter over their 1998-2000 border war.
The two states are now locked in what many analysts see as a proxy war in Somalia.
Ethiopia has accused Eritrea of sending arms and men to support the Islamic fighters, while Asmara says that Addis Ababa is occupying Somalia illegally at the behest of the United States.
Kenya, Uganda, Djibouti, Ethiopia, Sudan, are the other countries which make up the Igad east African bloc.
"The situation is Somalia has gone from bad to worse after the intervention of Ethiopian troops"
Abed, Kumasi, Ghana
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Ali Abdullahi, a Somali analyst in Nairobi, told Al Jazeera: "Igad has been the driving force behind the creation of the TFG [governing transitional federal government] in Somalia.
"What we see here is a desperate move by Eritrea … They are in a corner because they see financially and militarily they cannot challenge Igad, so the only way is to pull out of the Igad process and practically blame everything on Igad.
"This is a failure of policy by Eritrea."
Mohammed Adow, Al Jazeera's correspondent in Nairobi, said that Eritrea was not a driving force in Igad, but the balance of power within th bloc could now shift further toward Ethiopia.
"Countries in this region who come together in their regional bloc won't like to hear this news.
"The move will likely swing the balance, now that Eritrea is not there to argue against Ethiopia having its way when it comes to Somali issues.
"However, Eritrea has not traditionally been the driving force when it comes to the issue of Somalia. Kenya, Uganda, and Ethiopia have been at the forefront, while Eritrea has been on the peripheries."
Adow, based in Nairobi, said: "Kenya's border with Somali remains closed. It has been since late December, when a huge exodus of people decided to cross the border, including remnants of the Union of Islamic Courts.
"On the Somali side of Kenya-Somali border, there are thousands of refugees who now live in makeshift houses, who have nothing to depend on, and have not been allowed to enter Kenya.
|Locals say the number of refugees leaving |
Mogadishu is near half a million [EPA]
"Organisations are trying to get food to them, but rainfall and poor roads are impeding their movement.
"Thousands of people are trying to get into Yemen via the Gulf of Aden by taking very precarious boat rides, and many of them are dying."
The conflict in Mogadishu killed at least 41 civilians and six fighters on Sunday, taking the death toll in the last five days to 230, a local human rights group said.
The figures, which do not include Somali and Ethiopian soldiers killed, came from the Elman Peace and Human Rights Organisation which has been tracking casualties from hospitals, families and counts on the street.