By Martin Plaut BBC regional analyst

The two countries waged a bitter war between 1998 and 2000 over the issue - a conflict which cost around 100,000 lives.

Dusty Badme spawned the Ethiopia-Eritrea war

An international commission based in The Hague subsequently decided the border town of Badme, which sparked off the war, should go to Eritrea.

Marking the border was supposed to begin this month but a serious dispute has now broken out over how this should take place.

Maps have been drawn up, contractors appointed. Everything is ready for the first concrete pillars to be put into place.

But objections from Ethiopian Prime Minister Meles Zenawi, expressed in a letter to the United Nations Security Council, have stalled the process.

Mr Meles accused the Eritrea-Ethiopia Boundary Commission of abusing its mandate and of failing to stick by the terms of the peace agreement signed in Algiers in 2000.

Rebuttal

Now Commission chairman Elihu Lauterpacht has hit back.

In a strongly-worded letter to UN Secretary General Kofi Annan, he has rejected the Ethiopian accusations that the work of the commission is in terminal crisis.

"There is no crisis, terminal or otherwise," he says, "which cannot be cured by Ethiopia's compliance with its obligations under the Algiers agreement, in particular its obligations to treat the Commission's delimitation determination as final and binding."

With the Commission and Ethiopia now at loggerheads, the initiative is in the hands of diplomats.

The UN, as a guarantor of the peace agreement, could act.

So too could other signatories, including the United States.