The UN Security Council has failed for a second time to agree on a statement calling for the withdrawal of Ethiopian and other foreign forces from Somalia.
Somali government troops, backed by Ethiopia, are close to Mogadishu
The council had met to seek a ceasefire and get peace talks back on track.
Ethiopia has intervened to support Somalia's interim government and captured ground previously held by Islamist militias.
The African Union earlier called for Ethiopia to withdraw, as fighting moved closer to the capital Mogadishu.
However, the United States has signalled support for Ethiopia's intervention, with the White House saying Addis Ababa had reason for concern about Somalia's internal security situation.
At the UN in New York, Mutlaq al-Qahtani, a delegate from Qatar, which chairs the 15-member council for December, said there was no consensus on the call for an immediate withdrawal and an end to military operations.
US acting Ambassador Alejandro Wolff said the failure was "lamentable", adding that Qatar was alone in insisting that all foreign forces had to withdraw immediately.
UN Secretary General Kofi Annan said Somalia's neighbours should respect its borders and "stay out of the crisis".
The African Union, Arab League and the east African grouping IGAD had earlier urged Ethiopia to withdraw.
The Organisation of the Islamic Conference also called on both sides to prevent taking the conflict to the capital.
Ethiopian and Somali government forces are reported to be 30km (19 miles) north of the capital Mogadishu, after seizing the towns of Jowhar and Balad.
Somali Prime Minister Ali Mohammed Gedi told the BBC the people of Mogadishu would welcome his troops with flowers when they arrived and said the Ethiopian troops would be sent home as soon as the government controlled the whole country.
At the weekend Ethiopia began a major offensive against militia loyal to the Union of Islamic Courts (UIC), which held much of central and southern Somalia.
The Islamists now control little more than the coast, including Mogadishu and the southern port city of Kismayo.
The UIC's two most senior military commanders - the defence chief, Yusuf Indade, and his deputy, Abu Mansur - are currently both on the Hajj pilgrimage in Mecca.
However, diplomats in Kenya said some Islamist leaders had agreed to attend talks in Nairobi on Thursday aimed at halting the fighting.
Both sides say they have inflicted hundreds of casualties. The Red Cross has reported more than 850 injured people at hospitals it supports.
The UN's World Food Programme has suspended air drops into southern Somalia because of the fighting, but the Red Cross says it has been able to continue its cargo flights to its partners in Somalia.
Agencies are having difficulty reaching people affected by months of drought, which has now been followed by flooding
The UIC - which seized control of the capital six months ago - has introduced law and order to the capital and much of southern Somalia for the first time in 16 years.
But other countries accuse the UIC of links to al-Qaeda, charges it denies.
Somalia and Ethiopia have a history of troubled relations, and Islamists have long called for a holy war against Ethiopian troops in Baidoa.