Ethiopia is unhappy about the decision to hand over Badme

Legwaila Joseph Legwaila said a new war was unlikely in the near future.

But he added that the situation was still dangerous, particularly in view of the continuing stalemate over the disputed village of Badme.

The war between the two neighbours - which ended in December 2000 - cost hundreds of thousands of lives.

Badme is of particular significance because the border conflict began in May 1998, when Ethiopia accused Eritrea of invading the town.

Stalemate

After two and a half years of war, the two countries agreed in their peace agreement to let an independent boundary commission determine the border between them.

In 2002, the commission decided that Badme was on Eritrean territory - a decision rejected by Ethiopia.

On Tuesday Joseph Legwaila - the UN special representative for Ethiopia and Eritrea - said tensions were "especially dangerous in the sense that we are dealing with two countries which fought a terrible war more than three years ago and shed a lot of blood, killed more than 100,000 people".

Earlier this month the Eritreans objected to the appointment of a new UN envoy tasked with breaking the deadlock.

Eritrea said the role of the envoy, former Canadian foreign minister Lloyd Axworthy, was unclear, as there had already been an international ruling in the dispute.

Last week Germany and Britain urged Ethiopia to accept the boundary commission ruling to allow the border's physical demarcation to proceed.

A UN peacekeeping force is patrolling the security zone between Ethiopia and Eritrea.