By Aweys Yusuf

MOGADISHU, Nov 8 (Reuters) - Somali insurgents dragged the bodies of dead Ethiopian soldiers through the streets of Mogadishu on Thursday in the latest outbreak of fighting which has sent thousands fleeing the capital.

Witnesses said at least three Ethiopian soldiers, who are backing the interim Somali government, were killed during fighting in the Sqa Holaha neighbourhood in northern Mogadishu.

"I saw three Ethiopian troops killed by insurgents. Crowds of people were chanting 'God is great' and dragging their bodies on the ground," resident Deqo Ali told Reuters.

The fighting, which flares up frequently and often draws heavy reprisals from Ethiopian and Somali government troops, has sent hundreds of thousands fleeing the city this year.

It has become almost impossible for aid agencies to deliver food to those displaced.

Many ordinary Somalis and insurgents drawn mainly from a militant Islamist movement that ruled Mogadishu briefly last year resent the presence of Ethiopians -- ancient rivals -- on their soil and often carry out violent protests against them.

Hundreds of residents burned tyres and poured into the streets of southern Mogadishu on Wednesday in protest against the Ethiopians, who helped the government seize the city last year and remain its principal means of keeping a rein on the lawless capital.

In the south-central town of Baidoa, where the Somali parliament still sits, the United Nations country head for Somalia urged legislators on Thursday to move quickly to help stem the humanitarian crisis.

"I want to be clear here today that 1.5 million Somalis are in need of emergency aid. And the number of people that have been displaced goes up 850,000," U.N. Humanitarian Coordinator for Somalia Eric Laroche told parliament.

"We have to be able to help them and we have a problem reaching them."

Parliament's main order of business will be approving a new prime minister to succeed Ali Mohamed Gedi, who resigned last week after a feud with the president.

President Abdullahi Yusuf told parliament, which approved a legal change allowing non-legislators to serve as prime minister and cabinet ministers, that he would work quickly to find a replacement.

"We now have a challenge to nominate a prime minister, which I promise I will do by consulting with you," Yusuf said. Neither he nor his allies have said whom they are considering.

Diplomats say the legal change has widened the pool of qualified leaders from beyond the parliament, which counts among its members many illiterate warlords and clan leaders.

The hope, diplomats say, is that the interim government will be able to bring in qualified leaders from the Somali diaspora.

The feud between Yusuf and Gedi has stalled progress in the government, the 14th attempt at imposing central rule since the 1991 overthrow of dictator Mohamed Siad Barre plunged the Horn of Africa country into anarchy in 1991. (Writing by Bryson Hull; editing by Andrew Dobbie)

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