* Residents say troops seeking man linked to insurgents

* Say troops seize family of man they sought

By Mohamed Ahmed and Abdi Sheikh

MOGADISHU, Feb 7 (Reuters) - Ethiopian troops in armoured vehicles crossed into two border towns in south central Somalia and seized the family of a man with links to al Shabaab insurgents, residents said on Sunday.

They said troops went to El Barde and Yeed on Saturday seeking the man. Washington says al Shabaab is al Qaeda's proxy in the region and which has declared loyalty to al Qaeda.

"Ethiopian troops entered El Barde yesterday and arrested several people today. They were onboard armoured vehicles and were searching for a well-known local man who also works with al Shabaab," a town resident, Hussein Ronow, told Reuters.

"The man escaped, but they took with them his wife and three children. They also took the escaped man's brother and family. The troops have now gone but I understand they are in the outskirts of the town."

Ethiopia invaded its Horn of Africa neighbour with tacit U.S. support at the end of 2006 to oust an Islamist movement that was running the capital Mogadishu and much of the south.

The Ethiopian military officially withdrew in January last year.

Officials in Addis Ababa routinely deny that Ethiopian soldiers are on Somali soil, although they say they are providing security advice and training for Somalia's forces.

"Our enemies, the Ethiopians, have entered our towns and terrified residents. I understand they were searching for some of the residents," Sheikh Aden Yare, head of al Shabaab's administration in Bakool region, told Reuters.

Somali government officials could not be immediately reached for comment.

Somalia has not had an effective central government for close to two decades, spurring the rise of warlords, heavily armed criminal gangs and pirates who have been terrorising shipping off its coastline.

The international community and neighbouring countries are worried about the wider threat posed by al Shabaab insurgents who control a large part of Somalia and are fighting its fragile government.

For weeks, the government has been promising to launch an offensive against al Shabaab and Hizbul Islam, which both want to impose a harsh version of sharia law.

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