Islamist fighters have upped their campaign in Somalia's capital
Eritrea has denied reports that it has been supplying Islamists in Somalia with weapons and ammunition.
The Eritrean ambassador to the UN, Araya Desta, told the BBC that the claims were "totally false".
Both the US and the UN Security Council have voiced concern over reports of Eritrean involvement.
Several Somali Islamist groups operated from Eritrea after being ousted from the capital Mogadishu when Ethiopian troops entered Somalia in 2006.
Meanwhile the British ambassador to the UN, John Sawers, has said that the UN Security Council has not ruled out the idea of a UN peacekeeping force in Somalia, but has not decided to commit one as yet.
Following a week of violence, more than 100 people have been killed and some 30,000 more have fled Mogadishu.
Earlier on Saturday, President Barack Obama's top official on Africa, Jonnie Carson, told the BBC that there had been "credible" reports that Ertirea had been supplying weapons and munitions to Somali hardline Islamist group al-Shabaab.
But envoy Araya Desta told the BBC's Focus on Africa programme that such claims were "rubbish... this is totally false".
"Why do we have to support factions in Somalia?" he said.
"This accusation is always cooked by some neighbouring countries and some big powers in order to defame Eritrea."
He added that it would be very complicated for Eritrea to transport the weapons into Somalia, given the heavy presence of Western troops in Djibouti, which lies between the two countries.
"How do they know that Eritrea has sent weapons to Somalia, through which areas have [they] flown these planes?
AFRICAN UNION IN MOGADISHU
AU force in Somalia (Amisom) was mandated in January 2007
Supposed to be 8,000-strong but currently has only 4,300 troops
Comprised of soldiers from Uganda and Burundi
Sierra Leone has offered battalion, which would take force over 5,000
Restricted by security situation to operations in Mogadishu
"As you know the American army are in Djibouti, the French are in Djibouti and they control everything in the sea as well as in the land."
Mr Carson, the US Assistant Secretary of State for African Affairs, said there had been a number of reports of foreign fighters, with possible links to al-Qaeda, fighting alongside hardline Islamists of al-Shabaab and Hisbul-Islam.
He said these included people of South Asian and Chechen origin.
Somalia's President Sheikh Sharif Sheikh Ahmed has appealed to Islamist insurgents to negotiate as intermittent fighting continues in Mogadishu.
But his former ally and Islamist spiritual leader Sheikh Hassan Dahir Aweys has rejected his overture.
Sheikh Aweys returned to Somalia last month after two years of exile in Eritrea.
While he was out of the country he broke ranks with Sheikh Ahmed, a moderate Islamist, and his return seems to have triggered a new escalation in fighting, correspondents say.
The Somali authorities control only one major road in Mogadishu, with the assistance of about 4,350 African Union troops.
Ethiopian troops, who had intervened to support Somalia's fragile transitional government, pulled out at the end of January.
Eritrea fought a long war of independence against Ethiopia, and the two sides went to war again in 1998-2000 over a border dispute.