Heavily armed militia loyal to Somalia's Islamic courts have arrived in Burhakaba, a town 60km from the base of the interim government in Baidoa.
Somalia's interim prime minister says it is clear the Islamists, who control the capital, plan to advance on Baidoa.
"The national security forces are on high alert," Ali Mohamed Ghedi said.
The leader of the Islamist gunmen in Burhakaba told the BBC that there were no such plans and that the aim was to bring Islamic Sharia law to the region.
"This development could lead to more Somali bloodshed. It is a provocation and violation of areas under control of the government," Mr Ghedi said
His comments came as 150 government troops are reported to have defected to the Union of Islamic Courts (UIC).
Ethiopia, which supports the weak transitional government, has said it will intervene with force if UIC forces attack Baidoa.
Observers believe it is only a matter of time before the two sides clash.
The BBC's Mohammed Olad Hassan says that as the courts militia advanced on Burhakana, they dismantled road blocks run by militia who were extorting money from passing motorists.
Eyewitnesses reported seeing the Islamists entering the town with 10 armed pick-up trucks, known as battle wagons, he says.
Observers fear the latest move may derail efforts to organise talks between the government and UIC which were due to start last weekend.
Earlier this week, Islamist leader Sheikh Sherif Sheikh Ahmed denied reports that the UIC was planning to attack Baidoa, 200km from Mogadishu.
He was quoted as saying that they wanted to work with "whoever wants to return peace to Somalia".
Some fear that Somalia could descend into renewed conflict between the UIC and the government, possibly involving regional and international players.
Ethiopia, which is seen as close to the government, repeated its accusations that Eritrea is arming the UIC.
The UIC has accused Ethiopia of already sending troops to Baidoa but both governments have repeatedly denied such claims.
The International Contact Group was set up by the US after the Islamists seized Mogadishu last month.
'Porn film crackdown'
Meanwhile in Mogadishu, at least 14 people including a woman have been arrested for watching what Islamists say was a "pornographic" film.
"They were watching a sexual film, which is forbidden in Islam" said Sheikh Dahir Shiekhow, chairman of the court in the area.
The film, being shown at a local cinema, had scenes of nudity.
"At least 20 armed militia with a Toyota pick-up car mounted with a machine-gun arrived where we watched film; they ordered us not to move and then arrested us," said Mohamed Ade, who was released on Wednesday afternoon.
Mr Shiekhow said most the detainees had been released after being warned not to watch such films again.
The Islamists, which have brought some form of law and order to areas under their control after 15 years of anarchy, believe that Sharia law is the only solution to Somalia's problems.