The Eritrean Foreign Ministry said it would recognise United Nations demands for an immediate ceasefire, but denied its armed forces had carried out air raids or harassed civilians.

"Eritrea has not carried out any air strike. It has not violated the [air strike] moratorium. If it is attacked, its right to respond should be respected," a statement said.

It said a UN proposal for a voluntary international arms embargo on both sides would increase instability in the region.

Diplomats at the UN said the Security Council was likely to impose a mandatory embargo if the fighting in the disputed border area did not stop.

'Unwanted war'

Earlier Ethiopian Government spokesman Salome Tadesse said Eritrean aggression was solely responsible for the conflict.

"Ethiopia does not want this war. Ethiopia does not want anything more beyond reclaiming its invaded land and it will not accept anything less," she said.

Ethiopia's foreign minister: "No question" of a ceasefire

Ethiopian Foreign Minister Seyoum Mesfin said his country had no option but to continue fighting Eritrean forces until they left the disputed border area.

Simmering border tensions erupted at the weekend, after an eight-month unofficial ceasefire. Both sides have said they have inflicted heavy casualties in the increasingly bitter war.

Addis Ababa has warned Eritrea to evacuate its civilians from front-line border zones after five Eritrean civilians were reported killed during air raids on Tuesday.

Ethiopia said it regretted the deaths, but the Eritrean authorities should not have "positioned civilians so close to the hostile border for any length of time".

Widening conflict

The US Government has urged all its nationals to leave Eritrea and to consider leaving Ethiopia.

"The conflict could expand without warning and significantly affect areas of both countries beyond the immediate border region, including major urban centres," the State Department said.

As diplomats continue to search for a way to resolve the conflict, ambassadors from both sides have offered little prospect of an early end to the dispute.

Eritrea's UN Ambassador Haile Menkerios told the Security Council that attempting to broker a peace deal was not that simple.

"Ethiopia has not expended an estimated $300m on arms since last June simply to retake a desolate patch of rocks," he said.

But Ethiopian Ambassador Duri Mohammed accused the Eritrean regime of consistently sabotaging all peace proposals in the past nine months.