At least 10 people have been killed and more than 55 injured in clashes between insurgents and government forces in a residential area of the Somali capital.
About 60% of Mogadishu's residents have fled
The latest fighting came as the head of the country's UN refugee agency said he has never felt so frustrated with Somalia's lack of political progress.
Guillermo Bettocchi told the BBC it was still too dangerous for the UNHCR to move its operations back to Somalia.
On Monday, three aid workers and a journalist were killed in Kismayo.
A Somali boy also died in the roadside blast in the port city in an attack UN Secretary General Ban Ki-moon condemned as "brutal".
Kismayo has been relatively quiet compared with the capital, Mogadishu, but Islamist insurgents have threatened attacks there.
The BBC's Mohammed Olad Hassan in Mogadishu says the fighting started when government soldiers, supported by Ethiopian troops, were attacked by insurgents during a patrol in the north-east of the city.
The Ethiopian troops are not popular in Somalia
Mortars and heavy artillery were used and residents are now fleeing the area, he says.
Two hospitals in the city - Keysaney and Medina - say between them they have admitted 57 people injured in the attack.
Ethiopian troops intervened in Somalia just over a year ago, when they helped government forces oust Islamists from much of southern Somalia.
Since then it is estimated that 60% of Mogadishu's residents have fled their homes.
Our correspondent says those left in the city have been looking after property, but even they have started to leave.
Meanwhile, Mr Bettocchi said while the UNHCR would still be based in neighbouring Kenya, the agency would continue its humanitarian work in Somalia.
"I have never felt the way I feel now in the sense of frustration for the lack of progress in the situation," he told the BBC's Network Africa programme.
But he said the Somali people themselves were less negative.
"They see the conflict that is affecting Somalia for so many years as something that is the creation of the politicians or the warlords for their own interests," he said.
"The Somali people do appreciate the work that we are doing and they do have hopes and it is those hopes that keep us on the move."
So far only 1,600 Ugandan peacekeepers have been sent to Somalia, of a planned 8,000-strong force.
Over the weekend insurgents fired mortar rounds at the African Union compound connected to Mogadishu's main airport and a convoy was targeted by a roadside bomb.
An AU spokesman said the attacks would not deter the peacekeeping troops from carrying out their mission in Somalia.
Somalia has not had a functioning national government since 1991.