The Islamists took Bule Burte, 220 km (140 miles) north of the capital Mogadishu. It was not clear if there were casualties, witnesses said.

"It is true that Islamists captured Bule Burte, but they will not last there. The government will fight them and will liberate the town from the enemy," Yusuf Ahmed Hagar, government chairman of Hiraan province, told Reuters by phone.

The Islamists, who before their defeat by the government and Ethiopian troops a year ago had tried to impose Islamic sharia law on Somalia, put sharia into force again in Bule Burte, residents said.

"Islamist fighters seized the town. They fought and easily defeated government troops. We are now under the rules of the Islamists," Ali Osman, a resident, told Reuters by phone.

Witnesses said an Islamist who called himself Amin Daad gave a short speech to people of the town after seizing it from a handful of Somali troops.

"You should limit your movements because we are now in operation and when we are finished with our duties, we will meet you," Daad told the people of Bule Burte.

Islamist insurgents have fought back against the government and allied Ethiopian troops in the capital Mogadishu since they were ejected by them a year ago in a lightning war backed by U.S. intelligence.

ETHIOPIANS PULL BACK

Iraq-style car bombings and guerrilla attacks, often met by Ethiopian artillery and tank bombardments in retaliation, in Mogadishu and conflict elsewhere in the Horn of Africa nation have sent at least a million Somalis fleeing within the country.

In Mogadishu's Black Sea and Bar Ubah neighbourhoods, some residents who had fled began returning after Ethiopian troops who had occupied the areas for several weeks during sweeps for insurgents left, police said.

Witnesses said jubilant Somalis danced in the streets as the soldiers -- from Somalia's ancient rival -- moved out.

"The government told the Ethiopians to go back to their bases after considering complaints from the people and the traders in Mogadishu," police spokesman Abdulahi Ibrahim Omar said.

Somalia's interim government is struggling to impose national authority, missing since warlords plunged Somalia into anarchy in 1991 after ousting dictator Mohamed Siad Barre.

On Saturday Somalia's parliament passed a bill requiring licensing for media houses, and also guaranteeing that they not be censored. The law also says media cannot be required to broadcast one-sided reports.

Deputy parliament speaker Mohamed Omar Dalha said the bill was approved by 145 out of 159 legislators present.

This week, independent broadcasters shut down by Mogadishu's mayor finally went back on the air after they struck a compromise over restrictions he had imposed, criticised as draconian by media houses and press freedom groups.

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