The United Nations has declared a famine in two areas of southern Somalia as the region suffers the worst drought in more than half a century.
The UN said the humanitarian situation in southern Bakool and Lower Shabelle had deteriorated rapidly.
It is the first time that the country has seen famine in 19 years.
Meanwhile, the UN and US have said aid agencies need further safety guarantees from armed groups in Somalia to allow staff to reach those in need.
Al-Shabab, an al-Qaeda-affiliated group which controls large swathes of south and central Somalia, had imposed a ban on foreign aid agencies in its territories in 2009, but has recently allowed limited access.
An estimated 10 million people have been affected in East Africa by the worst drought in more than half a century. More than 166,000 desperate Somalis are estimated to have fled their country to neighbouring Kenya or Ethiopia.
The UN humanitarian co-ordinator for Somalia, Mark Bowden, said $300m (£186m) was needed to address the famine in the next two months.
The UK Secretary of State for International Development, Andrew Mitchell, said the response by many European and developed countries to the crisis in the Horn of Africa had been "derisory and dangerously inadequate".
"The fact that a famine has been declared shows just how grave the situation has become. It is time for the world to help," he said.
US Secretary of State Hillary Clinton said on Wednesday that Washington would provide an extra $28m in emergency aid to counter the famine.
She said the US had already provided $431m this year in emergency aid to the Horn of Africa, but that was "not enough".
Several aid agencies, including the UN refugee agency and the UK's Muslim Aid, are working at the camp. But Mogadishu's residents have also opened their hearts. They drop off water and food - cooked and uncooked. Local doctors also run a health post, referring the most critical cases to Mogadishu's poorly resourced hospital.
The weather has been cruel to those at the camp. There were heavy rains earlier this week, washing away many makeshift homes. They have been rebuilding them and hoping it will rain in the famine-affected area.
Drought, conflict and poverty have now combined to produce the necessary conditions for famine.
Those conditions include more than 30% of children being acutely malnourished, and four children out of every 10,000 dying daily.
"Across the country nearly half of the Somali population - 3.7 million people - are now in crisis, of whom an estimated 2.8 million people are in the south," said a statement by the UN Office for the Co-ordination of Humanitarian Affairs for Somalia.
It said that the ongoing conflict had made it extremely difficult for agencies to access communities in the south, which are controlled by al-Shabab.
"If we don't act now, famine will spread to all eight regions of southern Somalia within two months, due to poor harvests and infectious disease outbreaks," Mr Bowden warned.
Save the Children's Sonia Zambakides told the BBC the situation in Somalia was shocking.
"I was talking to mothers with children, the children looked maybe nine months to one year old - the mothers were telling the children were three and four years old, so they are absolutely tiny."
She said some of the mothers had walked up to six days with no food to try to find help.
Mark Bowden: "It is likely that conditions will deteriorate further in the next month"
The BBC's Mohamed Mwalimu in Mogadishu, says he met a woman called Habiba at a camp set up for the drought victims in the capital who had walked 200km (125 miles) from her village near Buurhakaba city in south-west Somalia.
Her five children were with her, but the youngest ones - aged two years and five years - died on the way.
She said she abandoned their bodies along the roadside because she was too weak to dig graves.
The BBC's Africa correspondent Andrew Harding says the emotive word "famine" is used rarely and carefully by humanitarian organisations, and it is the first time since 1992 that the word has been applied to a situation in Somalia.
Militia talks
Meanwhile, the UN is calling for unhindered access to affected areas, saying that the security situation is hampering humanitarian efforts.
Adrian Edwards, a spokesman for the UN refugee agency, told reporters that the situation for aid workers in Somalia is "not what we want it to be".
"We do have a very minimal presence, and we have regular visits into the country, but we need significantly better access than we have at the moment to address an emergency of this scale," he said, speaking from Geneva.
The UN World Food Programme, which is trying to feed 1.5 million people, estimates that as many as a million people are in areas it cannot currently access.
"Once we have the assurances of security and the ability to have full access to deliver and distribute and monitor, then we will be prepared to go back in," Emilia Casella, a spokeswoman for the WFP, told the Associated Press news agency.
Johnnie Carson, the US assistant secretary of state for African affairs, said the US was assessing if they were seeing "real change" from al-Shabab, or whether the group planned to impose some kind of "taxation" on aid deliveries.
"Al-Shabab's activities have clearly made the current situation much worse," Mr Carson said.
Mr Bowden said discussions with al-Shabab about the safe distribution of food aid were taking place at a local level, and that responses were expected to differ depending on the locality.
Then wear the gold hat, if that will move her;
If you can bounce high, bounce for her too,
Till she cry "Lover, gold-hatted, high-bouncing lover,
I must have you!"
Thomas Parke D’Invilliers
There's not much that can be done in Somalia, the last time foreign countries tried to intervene it resulted in the film Blackhawk Down being made.
It's a highly dangerous country and until the various warlords and Islamic groups are dealt with there will always be profound problems there.
Some men aren't looking for anything logical, like money.
They can't be bought, bullied, reasoned or negotiated with.
Some men just want to watch the world burn.
My brother in law is somalian and recently came back from there. He said that the country was pretty much on a knife edge.. in other words, even if the aid gets through, things won't change. When he said that, i swear i saw tears. That's something I never thought I'd ever see
"Damaged people are dangerous because we know we can survive"
