Monday's foray prompted the powerful Mogadishu-based Islamists to declare holy war against Horn of Africa rival Ethiopia, which it accuses of violating Somali sovereignty in the name of backing the shaky government.
Residents said the government and Ethiopian troops left Buur Hakaba, 30 km (20 miles) from its Baidoa base, after a few hours. Pro-Islamist fighters returned on Monday and were reinforced by others from Mogadishu on Tuesday.
"We went there yesterday for security reasons and in order to spread the government policy and to ensure the safety of the local administration there," government Interior Minister Hussein Mohamed Farah Aideed said.
"No Ethiopian troops accompanied us. Those are baseless allegations," he told reporters in Baidoa, an outlying town that is virtually all the government controls.
Ethiopian Prime Minister Meles Zenawi on Tuesday warned the Islamists against making any hostile moves in the name of jihad.
"It a source of concern to us," Meles told reporters after meeting Nigerian President Olusegun Obasanjo in the Ethiopian capital Addis Ababa.
"If and when we are threatened by the jihadists, we reserve the right to take any action we see fit."
Ethiopia has attacked militant Islamists in Somalia before, but this time Western governments fear that would open a new battleground to attract foreign fighters who view Addis as a tool of the West in a perceived assault on Islam.
Meles again said Ethiopia had only sent military trainers to help Somali President Abdullahi Yusuf's government organise its security forces, and not the regular troops which witnesses say are inside Somalia.
In the strategic southern port of Kismayu, threats of battle grew as the Islamists said they were preparing to attack the warlord alliance they ejected last month.
The remnants of the Juba Valley Alliance, who on Sunday said they planned to take the city back, were massing troops 45 km north of Kismayu, the Islamists' Kismayu security chief, Abdullahi Warsame, said.
"We will attack the militias who are in Derhani who are loyal to Barre Hiraale," Warsame said, referring to Somali Defence Minister Col. Abdikadir Adan Shire.
The Islamists captured Kismayu last month, but residents have protested repeatedly over the imposition of sharia law -- the first real resistance the group has faced since it seized Mogadishu in June.
Since then, it has rapidly spread across much of the south of Somalia, mired in anarchy since the 1991 overthrow of dictator Mohamed Siad Barre.
In doing so, it has all but crushed the government's plans to restore central rule across the nation of 10 million.
(Additional reporting by Guled Mohamed in Mogadishu, Sahra Abdi Ahmed in Kismayu and Tsegaye Tadesse in Addis Ababa)
Source: Reuters, Oct. 10, 2006