Ethiopian officials said at least seven people were killed and 10 wounded when the bus exploded in the Ethiopian-controlled town of Humera.

They said they believed an explosive device had been attached to the bus.

The blast happened just before the United Nations Security Council met to discuss the future of the UN force stationed in the disputed border zone.

The UN peacekeepers were sent eight years ago to monitor a border security zone, after the war which killed tens of thousands of people between Eritrea and Ethiopia in the late 1990s.

Troops face-to-face

The explosion took place on a crowded bus just as it was leaving the bus station at Humera at the western end of the Ethiopia-Eritrea border.

TENSE BORDER Dec 2000: Peace agreement Apr 2002: Border ruling Mar 2003: Ethiopian complaint over Badme rejected Oct 2005: Eritrea restricts peacekeepers' activities Nov 2005: UN sanctions threat if no compliance with 2000 deal Dec 2007: Deadline to demarcate the border expires without agreement Dec 2007: Eritrea cuts fuel supplies to the UN Feb 2008: UN warns of a return to war as it withdraws from Eritrea March 2008: Deadly bomb blast in border town Q&A: Horn's bitter war

Regional Vice-President Abadi Zemo told the BBC it was an inhumane attack against unarmed people going about their business who were in no way a military target.

He said that he believed that Eritrea was behind the attack as it would have been easy on the Eritrean side to sneak across and cause the explosion.

But contacted by the BBC, Eritrea's Information Minister Ali Abdu denied accusations that Eritrea was involved.

The BBC's Elizabeth Blunt in the Ethiopian capital, Addis Ababa, says Humera is one of the places where Ethiopian and Eritrean troops are face-to-face separated only by a bridge across the border river.

Burden

The UN peacekeepers have been forced to withdraw from a ceasefire zone on the Eritrean side after the Eritrean authorities cut off their fuel supplies.

There has been a build up of troops on the border

At the Security Council meeting, members recognised the burden the UN mission faces.

But they said a decision on the force's future would only be taken once they had received a further report from the UN secretary general on the situation.

The current tensions stem from Eritrea's anger about Ethiopia's failure to hand over the disputed town of Badme - which was awarded to Eritrea by a boundary commission set up after the war.

Eritrea wants the international community to put pressure on Ethiopia to withdraw.

Having lost patience with the UN, Eritrea cut off fuel supplies to the UN's 1,400 troops and 200 military observers in December.

Our correspondent says there is considerable concern in the region about what might happen if the mission is forced to close down.