President Abdullahi Yusuf has told the BBC he is to head south through Somalia from his northern stronghold collecting troops and militia as he goes.
President Yusuf fears for his life in the Somali capital
He plans to go to the town of Jowhar, which is 90km north of the capital, Mogadishu, and is his preferred temporary base for the new government.
The warlords in control of Mogadishu have threatened to attack Jowhar if the president establishes himself there.
Observers say the president's announcement could trigger fighting.
Since President Yusuf left his exiled home in Kenya last month he has been based in Bossaso in his home region of Puntland preparing to venture south to Jowhar.
"Without troops no government can work," the president told the BBC's Somali Service.
"We are now recruiting troops in Puntland. They are also being recruited in Hayran, Bay, Bakul, Gedo and Juba regions. We will mobilise," he said.
Somalia has not had a functioning government since the overthrow of President Siad Barre in 1991 and 13 previous attempts to end the anarchy have failed.
The Somali government, which was established in Kenya, has been divided since May, with the speaker of parliament operating from the capital, and the president refusing to move there while it is still under the control of his rivals.
The Mogadishu warlords were named as ministers in Mr Yusuf's cabinet but soon fell out with him, siding with the speaker.
Last month, President Yusuf met the speaker, Sharif Hasan Shaykh Adan, in Yemen's capital, but they failed to agree on where the government should be based.
Mr Yusuf is from the north-eastern region of Puntland and has little support in Mogadishu.
He has also been criticised for his links to Ethiopia, distrusted by many Somalis for meddling in the long civil war.
BBC Africa analyst Martin Plaut says that unless foreign powers, or Somali elders, can intervene to prevent a conflict erupting, the stage is now set for a confrontation between the president and his former associates in Mogadishu.