In a letter sent on Tuesday, Seyoum Mesfin, Ethiopia's foreign minister, told Eritrea it had breached the agreements that ended the war and that one of Ethiopia's options was to respond by terminating all or part of those agreements.

Ethiopia and Eritrea are the region's bitterest enemies. Eritrea seceded from its bigger neighbour in 1993 and the two countries fought a war from 1998-2000 that killed at least 70,000 people.

Tensions between them have risen this year as a stalemate over their disputed border continued, both sides massed troops close to the boundary zone, and Ethiopia accused Eritrea of supporting insurgents who have attacked its forces based in Somalia. A statement from Ethiopia's foreign ministry described Mr Seyoum's letter as a "long overdue formal legal measure with a specific purpose of putting Eritrea on notice that unless [it] returns into compliance with the agreements, its material breach would force Ethiopia to consider its peaceful and legal options under international law".

The breaches it cited were Eritrea's occupation of a temporary security zone around the disputed border; restrictions it has imposed on United Nations troops meant to be monitoring the zone; "public threats" against Ethiopia; and its alleged co-ordination of "the activities of terrorist groups to destabilise the region".

Ethiopia has a close security relationship with the US, which at the end of last year implicitly endorsed its invasion of Somalia. The US said last month it was assessing whether Eritrea should be designated a "state sponsor of terrorism".

Eritrea has denied accusations it is seeking to destabilise the region and fight proxy wars against Ethiopia.

Mr Seyoum's letter came less than three weeks after a boundary commission trying to broker a deal to demarcate the border between the two countries all but conceded defeat.

According to a meeting transcript seen by the Financial Times, Sir Elihu Lauterpacht, president of the Eritrea Ethiopia Boundary Commission, told them that after a five-year stalemate: "Effectively, we can do no more."

Mr Seyoum's letter stressed "Ethiopia's readiness to demarcate the boundary", the foreign ministry said. But the transcript indicates Ethiopia was seen by the commission as a greater barrier to progress than Eritrea.

Eritrea had offered "implications of flexibility" on moving troops out of the temporary security zone and loosening restrictions on the UN Mission in Ethiopia and Eritrea, said Sir Elihu during the meeting. Ethiopia would not discuss demarcation while Eritrea engaged in hostile acts.

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