The Islamists, who have called for "holy war" against Ethiopian troops in the country, threatened to boycott direct negotiations with the government until those soldiers were withdrawn, and Kenya was removed as co-mediator.
Arriving late in the Sudanese capital for the planned third round of talks, the Somali government said it would not accept pre-conditions from the other side, jeopardising the negotiations amid fears of all-out war and regional conflict.
But, late Monday after separate interventions with both parties, a mediator told AFP they had agreed to "face-to-face" talks" starting Tuesday, apparently saving the negotiations from collapse before they had begun.
"They are ready to talk face-to-face and end their grievances amicably," said Abdallah Al-Arimi, the Arab League ambassador to Somalia who was among the mediators and international observers to meet the delegations.
It was not immediately clear whether the talks, that had been set to begin on Monday, would go ahead as envisioned, as neither side could be immediately reached for comment about the reported development.
Earlier, the Islamists accused Ethiopia of "declaring war" against them and renewed demands for Ethiopian troops allegedly in Somalia to be pulled out as well as Kenya's removal as co-mediator if they are to meet the government.
"Ethiopia has declared war on Somalia and has already made a large military incursion deep into Somali territory," they said in a letter to mediators and observers attending the Khartoum talks.
"We are (also) seriously opposed to the co-chairmanship of Kenya in this peace process and we would like to be assured of acceptance of our points of view before the commencement of business," they said.
Arriving late in Khartoum, and causing an initial delay in the start of the talks, the government rejected any pre-conditions laid down by the Islamists.
"We have no conditions for peace and we will not accept the preconditions of others," said delegation chief Abdullahi Sheikh Ismail.
However, the UN special envoy for Somalia, Francois Fall, told reporters he was confident the impasses could be resolved, saying: "We do not expect any setback that will stop the delegates from proceeding with the peace talks."
The Islamists had said they would attend the talks but not meet with the government unless Ethiopia withdraws its troops.
They also rejected Kenya as co-chair of the negotiations, accusing it of bias for supporting, along with Ethiopia, government calls for the deployment of regional peacekeepers.
Mainly Christian Ethiopia denies reports it has as many as 8,000 soldiers in Somalia but acknowledges sending military advisers to help protect the government from "jihadists," some of whom are accused of links with al Qaeda.
Kenya was appointed this month to co-chair the negotiations with the Arab League, which had been the sole mediator at two previous rounds, after the government complained of Arab bias.
Kenya currently holds the presidency of the Inter-Governmental Authority on Development (IGAD), a group of seven east African nations that brokered the formation of the government in 2004 and now plans to send peacekeepers there.
But the bloc is deeply split over the proposed mission, with members Eritrea and Djibouti opposing the force; Kenya, Ethiopia, Uganda, the Somali government in favour; and Sudan backing off earlier support.
The Islamists have vowed to fight any foreign troops on Somali territory and, in their letter, accused IGAD and the African Union, which has endorsed the force, of creating "new hostilities."
They said rampant lawlessness, endemic since 1991, had been curbed in areas they control, since they seized Mogadishu in June and since expanded their territory to include most of south and central Somalia.

Copyright AFP (Agence France-Presse), 2006