The Shabaab movement earlier announced a major assault on the base in Halgan in the central Hiran region of the arid Horn of Africa nation, via its Telegram messaging platform.
Ethiopian government spokesman Getachew Reda dismissed a claim by the Shabaab that they had killed dozens of soldiers, while losing just 16 of their own fighters.
"There was an attempt by al-Shabaab to attack our forces in central Somalia but... Our forces killed 101 militants and destroyed heavy weaponry," Getachew said.
"The Mujahideen fighters stormed the base and massacred many of the Ethiopians," the Shabaab claimed on Telegram, putting the death toll among the troops at 60.
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Casualty figures from this type of attack are impossible to verify independently. The Shabaab generally exaggerates, while the African Union Mission in Somalia (AMISOM) usually gives no details of losses among its ranks.
On its Twitter account, AMISOM - comprising troops from Burundi, Djibouti, Ethiopia, Kenya and Uganda - confirmed "an attempted Shabaab attack" but gave no figures.
Residents in the area close to Halgan said the attack began when a vehicle driven by a suicide bomber exploded at the entrance to the base, after which jihadist gunmen fought their way in.
"There was a huge blast and then heavy exchange of gunfire started," said Osman Adan, a resident living nearby.
Shooting had died down by mid-morning today and local authorities confirmed the clashes.
"There was a major attack this morning at Halgan. Violent elements tried to break into the the base of the Somalian army and of AMISOM, but they were driven back and their bodies are everywhere," senior official Guhad Abdi Warsame said.