"This is simply a total fabrication," Bereket Simon, special adviser to Prime Minister Meles Zenawi, told The Associated Press.
The Times report, published Friday, cited unnamed American sources officials from several U.S. agencies with a hand in Somalia policy as saying the U.S. soldiers used an airstrip in Ethiopia to mount strikes against Islamic militants in Somalia.
The report went on to say that the U.S. and Ethiopia relationship included the sharing of intelligence on the militants.
U.S. officials earlier acknowledged two airstrikes over Somalia in January, but had given few details. The strikes were reported to have been conducted by U.S. forces based in another Horn of Africa country, Djibouti, though officials had not confirmed that.
U.S. ships had also patrolled off Somalia's coast in search of al-Qaida members thought to be fleeing Somalia following Ethiopia's December invasion.
Meanwhile, Uganda's top defense officials arrived in Somalia ahead of a planned African Union peacekeeping deployment, a day after Islamic extremists threatened suicide attacks against Ugandan and other foreign troops, officials said Friday.
Uganda's Defense Minister Crispus Kiyonga and Chief of Defense Forces Aronda Nyakairima said their forces would help train a national army and provide security to Somalia's transitional government, a Somali government minister said.
"We expect the troops to be here in two weeks," Hassan Abshir Farah, who represented the Somali government at one meeting, told The Associated Press.
Talks were held in the southern town of Baidoa on Thursday. The five-member Ugandan mission then traveled to the restive capital, Mogadishu, on Friday for further talks with Deputy Defense Minister Salad Ali Jelle to assess bases for the AU peacekeepers, their arrival date and stabilization of the country, Jelle said.
AU officials say they have more than $70 million through donations from the European Union, U.S. and Britain to pay for the Somali peacekeeping mission.
"The African Union will reimburse each troop-contributing country for the costs incurred for their troop deployments," Assane Ba, spokesman for the AU's conflict prevention department, said from its headquarters in the Ethiopian capital, Addis Ababa.
The AU peacekeeping force is planned to reach a level of 8,000 troops.
The government, backed by Ethiopian troops, drove out a radical Islamic movement that had gained control of the capital Mogadishu and most of the south. The U.N. Security Council on Tuesday unanimously approved its deployment.
Ethiopian troops have started to pull out, to be replaced by the peacekeeping force, which will have to confront the growing violence that has plagued Mogadishu since the interim government took over.
An advance team of Burundian peacekeepers was scheduled to begin arriving Friday but defense official's have been unwilling to comment on the deployment.
Insurgents have staged near-daily attacks since the Islamic militants were driven out, with Mogadishu's civilian population bearing the brunt of the violence. Hundreds of families have begun fleeing the coastal city of 2 million people, and hospitals are struggling to cope with the daily influx of wounded.
Somalia has not had an effective national government since 1991, when warlords overthrew a dictator, carved the capital into armed, clan-based camps, and left most of the rest of the country ungoverned. A transitional government was formed in 2004 with U.N. help. Weakened by clan rivalries, it struggled to assert authority, leaving a vacuum the Islamic movement moved to fill.
The Islamic movement chased the warlords from Mogadishu last year and was credited with restoring order in areas of southern Somalia it controlled. But some Somalis chafed at its fundamentalist version of Islam and the U.S. and the Somali government accused it of harboring Al Qaeda suspects.