A car bomb exploded in Mogadishu Tuesday near a meeting involving two Kenyan ministers after Shebab rebels promised Nairobi all-out retaliation for its unprecedented military operation inside Somalia.

Two days after declaring war on Somalia's Islamist insurgency, which it blames for a string of kidnappings, Kenya's forces advanced on a strategic rebel-held town deep inside southern Somalia.

The shock move by Nairobi, which was conducted without any mandate and left the region mum, drew a fierce reaction from the Al Qaeda-inspired Shebab, who threatened Kenya with reprisals on "all fronts."

A suspected car bomb exploded in Mogadishu near the foreign ministry where Kenya's Defence Minister Yusuf Haji and Foreign Minister Moses Wetangula were meeting officials from the Western-backed Somali transitional government.

"There was heavy explosion near the foreign affairs ministry building and initial reports are indicating a car laden with explosives detonated. We are still investigating the incident," Mohamed Adan, a Somali official said.

No official confirmation of the death toll was immediately available but reports suggested the attack claimed at least two victims and was carried out by a suicide bomber.

"There was a huge blast near K5 and everybody starting running, I saw two dead bodies and seven others who were injured," Said Yusuf, a witness said.

It was unclear how long Kenyan troops planned to stay in Somalia but Nairobi had been under growing pressure to take action and attempt to restore confidence that it could safely host tourists and one of the world's largest aid communities.

Kenya and Somalia's defence ministers signed an agreement to "cooperate in undertaking security and military operations" including "coordinated pre-emptive action," but limiting Kenyan operations to Somalia's Lower Juba region.

Critics say Kenya promised increased security measures after the first kidnapping, that of British tourist Judith Tebbutt last month, but failed to prevent a second abduction of French woman Marie Dedieu in the Lamu archipelago three weeks later.

A third incident, the kidnapping of two Spanish aid workers in Dadaab, long a security worry for Kenya because of chronic overcrowding, happened last Thursday, apparently prompting the incursion over the border.

"Our forces will be concentrating on operations in Afmadow region today," said Kenyan army spokesman Major Emmanuel Chirchir.

Kenyan troops have pushed at least 120 kilometres (75 miles) into Somalia to reach Afmadow region, guided by pro-government Somali forces, backed by heavy aerial bombardments but bogged down on mud tracks in heavy rain.

Senior Shebab leader Sheikh Hassan Dahir Aweys warned that Kenya would face the consequences of moving troops into Somalia.

"Kenya has joined the list of occupiers of another country's land, and history will tell what happens to their aggression," Aweys, a top Shebab leader and key figure in Somali Islamism, told AFP by telephone from Somalia.

"We shall spare no efforts and will fight Kenya on all fronts possible. We are not afraid to fight to the death because Allah will reward us if we die. History will tell that we were defending our homeland while the Kenyans will die aggressors."

Meanwhile police stepped up security and beefed up their intelligence mechanisms, particularly in Nairobi.

"I appeal to Nairobians and Kenyans in general to be extra alert, and in case anybody sights any suspicious and strange person or any suspicious object to report to any police officer," Nairobi Provincial Police commander Antony Kibuchi said and circulated hotline numbers to the public.

"We have stepped up security across the city following these threats."

Kenyan police said that two British nationals were arrested Sunday near the border with Somalia "on suspicion of terrorism activities."

The pair are believed to be from Cardiff, which is home to one of the largest Somali communities in the United Kingdom.

Police also arrested 10 people in Dadaab suspected of militant links as "part of security measures to ensure Kenya is free of the Shebab," regional police chief Leo Nyongesa said.

The last time Somalia was invaded by one of its neighbours was in late 2006 when Ethiopia started an occupation that lasted two years and spurred the formation of the Al Qaeda-inspired Shebab insurgency.

But Kenya said it was not frightened by the Shebab's grim warning.

"We will not give up at all, we will not be cowed or intimidated by the Shebab," Chirchir said.