The capture of the town of Beam is a "blatant violation" of Liberia's territorial integrity, President Charles Taylor's private radio station said on Monday.
"The government will take the appropriate measures to expel the terrorists," Kiss-FM radio station said.
IVORY COAST CONFLICT
The alleged cross-border attack in Liberia's southeast border county of Grand Gedeh heightens concerns that the four-month-old conflict in Ivory Coast is inflaming tensions in the West African region.
Fighting killed one person and injured several others, the radio said.
It is unclear who is responsible for the attack.
Liberian rebels have been battling the government for some time, but in recent weeks have also become embroiled in the insurgency against the Ivorian Government from bases in western Ivory Coast.
Many Liberians have been fleeing the fighting in Ivory Coast and seeking to return home.
The Ivorian rebels want President Laurent Gbagbo to step down and are demanding fresh elections, blaming him for a surge of ethnic tensions and bloodshed.
Ivorian talks
At present, peace talks between representatives of the Ivory Coast Government and rebels are taking place in Paris.
French mediators say there has been progress, with unconfirmed reports that a deal may be emerging on a thorny issue at the heart of the talks - rebel objections to controversial nationality laws.
Meanwhile West African peacekeepers have begun arriving in the Ivory Coast over the weekend.
The 2,500-strong West African peacekeeping force, being led by Senegal, will eventually replace French troops monitoring the ceasefire between Ivorian government troops and the main rebel faction.
Also at the weekend, there were demonstrations in support of both sides.
In Abidjan, up to 30,000 government supporters marched to show their backing for the president.
A pro-rebel march in the northern city of Bouake reinforced the call for early elections.