The African Union says Ethiopia has the right to intervene militarily in Somalia as it feels threatened by an Islamic militia operating there.
The Islamic militia wants foreign fighters to join a "holy war"
An official also admitted the African Union had failed to "react properly and adequately" to the Somali situation.
At least one town and a village under the control of the Islamic Courts Union have fallen to soldiers of the transitional government, reports say.
Ethiopia's prime minister has said his country is "at war" with the Islamists.
Ethiopian jets bombed two airports in Somalia on Monday in support of the transitional government's battle against the Union of Islamic Courts (UIC).
Fighting had flared last week between the UIC, which holds most of central and southern Somalia, and Somali government forces, based around the southern town of Baidoa.
The town of Burhakaba, one of the Islamists' main bases close to Baidoa, was abandoned early on Tuesday, reports say.
Ethiopia admitted for the first time on Sunday its troops were fighting in the country.
The UN estimates at least 8,000 Ethiopian troops may be supporting the transitional government.
Patrick Mazimhaka, the deputy chairman of the AU's Commission, told the BBC the African Union would not criticise Ethiopia as it had "given us ample warning that it feels threatened by the UIC".
He added: "It is up to every country to judge the measure of the threat to its own sovereignty."
Mr Mazimhaka said the international community had a responsibility to support the transitional government.
The African Union would meet in two days to discuss the situation, he said.
"The African Union must plan to get a force to intercede and stabilise the situation," Mr Mazimhaka said.
On Monday, Ethiopian jets bombed the international airport in the Somali capital, Mogadishu, and another at Balidogle, in the south of the country.
Two senior leaders of the UIC, Sheikh Hassan Dahir Aweys and Sheikh Sharif Sheikh Ahmed, landed at Mogadishu shortly after the air strike, a clear sign that the attack there did not disable the runway.
The Ethiopian government said it hit the two airports to stop "unauthorised flights", the AFP news agency reported.
A spokesman for the UIC, Abdirahman Janaqow, told the Associated Press the Islamists would stand firm against Ethiopia.
"We will overcome the Ethiopian troops in our land. Our forces are alert and ready to defend our country," he said.
The Islamist group has appealed for foreign fighters to join its troops in a "holy war" against Ethiopia.
Somali and Ethiopian troops also captured a checkpoint outside the flashpoint town of Beledweyne.
UIC forces then left the town, the scene of sustained fighting on Sunday.
Red Cross plea
Ethiopia began attacking the UIC across a 400km (250-mile) front line along the border on Sunday.
PM Meles Zenawi said Ethiopia was forced to defend its sovereignty against "terrorists" and anti-Ethiopians.
Aid agencies say all sides must protect civilians
"We are not trying to set up a government for Somalia, nor do we have an intention to meddle in Somalia internal affairs. We have only been forced by the circumstances," Mr Meles said.
"We want to end this war urgently and we hope that Ethiopian people stand by the defence forces."
The Red Cross has urged all parties to protect civilians from harm.
Thousands of Somalis have fled the escalating violence, and the Red Cross says the fighting is straining an already weak support system in the country.
Red Cross official Pedram Yazdi told the BBC that the organisation was treating 445 people injured during the fighting, including combatants and civilians.
Aircraft are taking some two tonnes of supplies into Somalia from Kenya each day in an effort to keep hospitals adequately supplied, he said.
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