Both sides in Somalia are playing down the significance of a deadline given by Islamists for a "massive attack".
The government is getting military help from Ethiopia
Witnesses say forces of the interim government have been patrolling the outskirts of the city of Baidoa, their stronghold, alongside Ethiopian forces.
But the Islamic Courts Union, which controls much of the south, backtracked on an ultimatum for Ethiopians troops to leave Somalia by the end of Monday.
The comments contrast sharply with threats of a holy war made last week.
Islamic Courts Union spokesman Abdi-Rahiin Ali Mudey said the Islamists would not attack the Ethiopians or Baidoa.
The government has also said talks could resume if the Islamists stopped making threats.
Last week, President Abdullahi Yusuf Ahmed ruled out any further talks.
Mr Mudey said the Islamists were using the deadline to give the Ethiopians a chance to start negotiations with them, but that Islamist forces would defend themselves if attacked.
"Ethiopia has recently asked us to start talks with them so the deadline was basically meant to tell the Ethiopians to withdraw from Somalia, then talks they offered would be possible," he said.
Information Minister Ali Ahmed Jama said the interim government had been counting the days, waiting for "the last minute of the deadline".
"We will not be the first one to attack, but will not stand by and watch if we are attacked," he said.
Islamic leaders deny accusations of al-Qaeda links. On Sunday, the Union of Islamic Courts said nearly 200 government troops had defected to their side. The government denied the allegations.
Minor clashes have broken out between the two rivals, but neither side has launched a large offensive.
On Saturday Islamist leader Sheikh Sharif Sheikh Ahmed said the movement was prepared for "dialogue" with Ethiopia.
In Yemen, he announced a deal with the speaker of the Somali parliament to resume talks after they collapsed last month.
Ethiopian Information Minister Birhan Hailu told the BBC that his country was always ready for dialogue, but said the Islamists were not willing to talk with the transitional government.
"We don't have troops in Somalia, but as we have said so many times, we have a limited number of military advisers to support the Transitional Federal Government of Somalia.
"The Ethiopian government is always ready to have peace talks with anybody in Somalia, and we wish a peaceful solution to the problem in Somalia."