Residents in the southern Somali port of Kismayo are reported to be nervous that forces loyal to warlord General Morgan are planning an assault.
At least 50 of General Morgan's heavily armed vehicles are reported nearby.
The advance is being resisted by the Juba Valley Alliance militia, and there were reports of skirmishes outside the town on Sunday.
General Morgan has refused to join the latest Somali peace talks, or take up a seat in the planned transitional parliament set up in Kenya last month.
Fertile region
The warlord, whose full name is Mohammed Hersi Si'iid Hersi, was nicknamed the Butcher of Hargeisa, after being accused of murdering scores of innocent civilians during fighting in the Somaliland capital.
He is the only major militia leader to refuse to participate in the peace process.
Somalia has been without a central government since early 1991, when the Somali government of the late military ruler Mohamed Siad Barre collapsed.
General Morgan, his son-in-law, has in the past received support from neighbouring Ethiopia.
This will be the second time in three years that the warlord has tried to take Kismayo.
During his last attempt his forces were swiftly beaten back but not before many people were killed.
Kismayo would be a rich prize for the militia leader. It has a port close to the Kenyan border and its main town is in a fertile agricultural area.
Observers speculate that this is General Morgan's attempt to destabilise the fledgling parliament and to establish himself as a force still to be reckoned with.
Influential warlord Hussein Aideed, who is part of the peace deal reached in Kenya, has called for his inclusion.
At the weekend, the regional body Igad, warned General Morgan that he would be punished if he did not stop his military activities, threatening him with being brought before the International Criminal Court if he crosses into the territory of Igad member states.
Igad envoys are meeting on Monday at the Somali peace talks in Nairobi to discuss General Morgan's military activities.