(Adds parliament vote, Ethiopia, African Union)
BAIDOA, Somalia, Jan 27 Somalia's hardline Islamist insurgent group al Shabaab introduced sharia law in Baidoa on Tuesday, a day after taking the town that had been a government stronghold and seat of parliament.
Fighters from al Shabaab, which is on Washington's list of terrorist groups, captured Baidoa on Monday after the withdrawal of Ethiopian troops who had been supporting the government.
They quickly took the airport, parliament building and president's home, and called locals to a meeting at a football stadium on Tuesday to explain how they would govern.
"We shall make changes in the town and will rule by Islamic law," al Shabaab spokesman Sheikh Muktar Robow Mansoor told hundreds of people in the stadium.
Al Shabaab's takeover of Baidoa has thrust it back into the spotlight in Somalia after it appeared to be losing support among the population because of hardline tactics, and had lost some territory to another, moderate Islamist group.
The town's capture also poses a practical problem to Somalia's parliament, meeting this week in neighbouring Djibouti.
The government is now restricted to Mogadishu, but even there it faces near-daily attacks from the insurgents. Whether parliamentarians would agree to re-locate to the battle-scarred, half-empty, coastal city is unknown.
In Djibouti, the legislators have voted this week to expand parliament to bring in moderate Islamists in an attempt to form a unity government. They are also due to elect a national president under a U.N.-brokered peace plan.
Parliament voted on Tuesday to extend the time for electing a president so the 200 new opposition members can be sworn in and an election committee set up. "We will elect the president within five days. If we can finish in two days we will," said parliament speaker and interim President Sheikh Aden Madobe.
The United Nations is pushing for the election on Wednesday and wants a new president chosen at least by the end of the week so he can attend an African Union summit starting on Sunday.
ETHIOPIA RULES OUT RE-ENTRY
Al Shabaab has rejected the Djibouti talks.
Mansoor urged Baidoa residents to stay calm, after looting of empty Ethiopian bases and widespread fighting on Monday, and vowed that the Islamists would provide security.
"Those who looted property of the government yesterday should return within two days or else they will be brought before an Islamic court," he said. "Any member of the government who is not fighting against us will not be harmed."
Al Shabaab's presence in Baidoa, near the border with Ethiopia, will irk Addis Ababa, which this week ended a two-year military intervention in Somalia precisely to curb the Islamist threat. Ethiopia has kept a heavy troop presence on the border.
But it ruled out entering Somalia again on Tuesday.
"We have fulfilled our promise to withdraw our troops," government communications head Bereket Simon told Reuters in Addis Ababa. "There is no new decision to go back into Somalia."
He was reacting to a comment by the AU's top diplomat, Jean Ping, at a news conference that Ethiopia may take action if the situation on the ground deteriorates. "The AU is very much preoccupied by the worsening situation in Baidoa," Ping added.
Baidoa residents said they accepted the al Shabaab takeover.
"We must welcome them, because we have no other choice," said shopkeeper Ismael Aden. "Now the town is calm and there is no looting. But we are afraid what happened in Kismayu might happen in Baidoa in the near future."
Al Shabaab took Kismayu port, in south Somalia, last year. Residents say the group has made the town secure but they complain of strict practices like executions. (Reporting by David Clarke in Djibouti, Abdi Sheikh and Abdi Guled in Mogadishu, Tsegaye Tadesse in Addis Ababa; Writing by Andrew Cawthorne; Editing by Janet Lawrence)