Rival Somali warlords have clashed in Baidoa, killing at least 15 people over plans to relocate the government - now based in Kenya - to the city.
There has been tension in Baidoa and its surrounding area for months
The heavy fighting broke out in the early hours of Monday morning, lasting more than six hours, eyewitnesses say.
The city remains in hands of Mohamed Habsade, who wants the government to move to the capital, Mogadishu - in defiance of the new president.
Somalia has been devastated by civil war and anarchy for 14 years.
The Mogadishu warlords want the interim government to set up in their city when it leaves neighbouring Kenya.
But President Abudullahi Yusuf, who has little support in the capital, says Mogadishu remains too dangerous and wants to go to Baidoa and Jowhar instead.
According to the BBC's Mohammed Olad Hassan there has been tension in and around Baidoa for months, with both militias amassing weapons.
The rival fighters, loyal to Mohamed Habsade and Hassan Mohamed Nuur Shargudud - both members of the Somali parliament - were using assault rifles, double-barrelled anti-aircraft missiles mounted on big trucks, and heavy machineguns, our correspondent says.
Sources from the only hospital in the city say 15 people, including children, were killed and more than 20 others were wounded.
Since fighting died down, hundreds of people have begun to flee from the city, fearing the clashes may restart as reinforcement militias from both sides are heading towards the city.
The row over where to where to relocate the new administration - formed last year after two years of talks in Kenya - is threatening to split the government.
A third of Somali MPs have already moved back to Mogadishu.
Mr Habsade and his supporters see the president as an ally of Ethiopia.
They feel a move to Baidoa, which is closer to Ethiopia's border, would shift the balance of power in the new government towards the president.
Recently, Mogadishu warlords accused Ethiopia of giving weapons and troops to people close to Mr Yusuf, so he could mount an attack on Baidoa. Ethiopia strongly denied the allegation.
The African Union has agreed to send some 1,700 troops to Somalia but said it would not send them unless it was safe to do so.