Thousands of Ethiopian troops, backed by aircraft, artillery and tanks, have escalated a military offensive against fighters from the Islamic Courts Union.
They also bombed airports to prevent the courts from rearming and moved further into courts-held territory.
Yusuf Dabo Geed, a Somali government officer, said: "We have taken control of Baladweyne and our forces are chasing the terrorists.
"We have killed more than 60 Islamists, wounded others and captured some as prisoners of war."
The offensive came after thousands of Ethiopian soldiers prevented the Islamist Courts Union from surrounding and capturing Baidoa, the only major city under government control.
Following their defeat in Baladweyne, leaders of the Islamic courts called on the Ethiopian troops to withdraw.
Sheikh Mohamed Ibrahim Bilal, a senior Islamic commander, said: "We call on the international community to act soon about this violation."
Both sides have reported killing hundreds of their opponents in the recent fighting, but the claims could not be independently confirmed.
Also on Monday, Ethiopian fighter jets bombed the airports of
"Ethiopian attacks against
Solomon Abede, the Ethiopian foreign ministry spokesman, said: "It was attacked because illegal flights were attempting to land there.
"It was also reported that some of the extremists were waiting for an airlift out of
In November, a UN arms-monitoring group reported that flights originating in
The UN and the Somali government said that many of the flights carried arms and military supplies for the Islamic Courts. The