An Islamist militia that controls much of Somalia has clashed with fighters loyal to a warlord who backs the transitional government.
The Islamic Courts now control most of southern Somalia
Witnesses said at least eight people were killed in the fighting.
Some reports say the Union of Islamic Courts has captured the strategically located settlement of Bandiradley, near the border with the Puntland region.
Semi-autonomous Puntland has escaped much of the anarchy, which has ravaged southern Somalia since 1991.
The Union of Islamic Courts militia has made a rapid advance through southern Somalia since capturing the capital Mogadishu in June.
But it has stopped short of seizing Baidoa in the south - the headquarters of the transitional government - which the neighbouring Ethiopian army has pledged to protect.
The Islamic Courts and local residents said the militia had taken control of Bandiradley, in Mudug region, after heavy fighting.
But a spokesman for Abdi Hassan Awale Qeybdiid, the warlord who controls the area, told AFP news agency his troops had only retreated tactically.
Mohamed Mohamud Jama, an Islamic Courts spokesman in Mudug, told the agency they were now planning to march on Galkayo, a major town in Puntland to the north.
The Islamists have so far resisted moving into Puntland, which runs its own affairs and has its own well-armed militia.