Five members of the same family were killed in the northern Gubta neighbourhood in a similar incident.
"Mortar shells rained down on our neighbourhood and so far I have seen five innocent civilians from the same family killed, three of them children," Husein Yusuf Ahmed, a local elder, said.
Ali Ibrahim Moalim, another local resident, gave the same death toll and added that seven others were wounded in the violence.
Several witnesses said that two civilians were also killed in Mogadishu's southern district when they were caught in crossfire during fighting between Ethiopian troops and Islamic Union loyalists.
Abdurahim Ise Addo, a spokesman for the Islamic Courts Union, admitted to two deaths in the group's ranks.
He also said his forces killed 10 Somali and Ethiopian soldiers in Thursday night's fighting.
"We killed 10 soldiers from Ethiopia and its Somali stooges. We also lost two fighters," Abdurahim said.
The number of casualties among Ethiopian and Somali government troops could not immediately be confirmed.
Civilians have borne the brunt of the violence that has plagued Mogadishu and other parts of Somalia since Ethiopian forces intervened to help an embattled government force out the Islamic Courts Union in late 2006.
According to several rights organisations and aid groups, at least 6,000 civilians were killed over the past 12 months of fighting.
On June 9, the transitional government and the main opposition alliance agreed on a document that stipulates a truce should take effect within a month.