At least 30 people, and probably far more, were killed as shells rained down on the capital and deafening tank fire shattered homes.

Hundreds of guerrillas replied with barrages of mortars, missiles and rocket-propelled grenades (RPGs).

Terrified residents hid in their homes and reporters watched from rooftops as two Ethiopian helicopters fired on an insurgent stronghold before one of them was struck by a missile or RPG.

“Smoke billowed from the cabin and it turned towards the ocean,” one witness, Swiss journalist Eugen Sorg, told Reuters. “It crashed at the south end of the airport runway.”

The joint Ethiopian and government offensive triggered the bullet-scarred city's worst clashes for months.

UN Secretary-General Ban Ki-moon said he was “deeply disturbed”.

“He is particularly concerned about the use of air strikes and the introduction of tanks and heavy artillery into densely populated parts of the city,” a spokesman said.

More than 200 people have been wounded since yesterday, and the toll of dead and maimed looked certain to rise.

“A mortar has just fallen into the house next to me. We can hear crying,” said south Mogadishu resident Faisal Jamah.

“There are a lot of wounded, but there is no way to take them to the hospitals due to the fighting.”

Mobs dragged dead Ethiopian soldiers through the streets yesterday, and wild-eyed gunmen posed with the corpses.

The bloody scenes recalled the shooting down by militiamen of two US Black Hawk helicopters in 1993 during a failed US mission to hunt down Mogadishu warlords.

With some of the clan militia who used to rule the capital fighting alongside the Islamists, the battles have torn to shreds a brief and shaky truce between the Ethiopian military and the city's dominant clan, the Hawiye.

Analysts said Addis Ababa seemed bent on an all-out push against the insurgents, who have been emboldened by recent strikes - including the downing of an airplane serving an African peacekeeping mission - and ambushes killing soldiers.

While Christian-led Ethiopia clearly hopes the offensive will crush the rebels once and for all, many experts said it may have the opposite effect of further alienating Mogadishu's population or attracting foreign Muslim jihadists.

Somalia's ambassador to Ethiopia, Abdikarin Farah, said the attacks were limited to one insurgent stronghold and were aimed at flushing out “international terrorists”.

He said action had only been taken after Mogadishu elders admitted they had failed to convince the rebels to disarm.

“It is targeted at a small area of the city where the terrorists are entrenched,” he said in Addis Ababa.

“Many terrorists and Islamists have been captured and many were killed, but I have no figure to give you at this time.”

The White House told the US Congress yesterday foreign militants were still able to find a safe haven in Somalia.

Some of the heaviest fighting rocked streets around the main soccer stadium, where witnesses said Ethiopian troops and rebels had dug trenches just a few metres apart.

One Islamist gunmen said the Ethiopians were pinned down.

“We killed a lot of them and burned their trucks,” Hassan Osman said.

“Right now, they control only the stadium.”

Local media said panic-stricken civilians continued to flee the city, many of them piling their possessions on donkey-carts. The UN said 12,000 left in the last week alone.

Despite the carnage, Prime Minister Ali Mohamed Gedi was confident a major reconciliation conference in Mogadishu in mid-April would go ahead.

The mandate for the administration - the 14th attempt to restore central rule in Somalia since 1991 - runs out in 2009, after which in theory there should be elections.

The African Union (AU) has sent 1200 Ugandan troops to help the government, but they have been attacked.

Other African nations are baulking at sending more soldiers to boost the AU force to its planned strength of 8000.