The United Nations Mission to Ethiopia and Eritrea (Unmee) has urged both countries to take speedy steps to demarcate their common border.
More than 4,000 troops monitor the truce
UN force commander General Robert Gordon warned that the peacekeeping operation risked ending in failure unless this was done.
He was chairing talks between senior Ethiopian and Eritrean military officials in Kenya.
The African Union echoed the warning, saying the situation could "get out of hand".
The demarcation process is due to start next month, but Ethiopia has yet to appoint a liaison officer.
Observers say Addis Ababa has been holding up the process over the disputed village of Badme - the starting point of the two and a half year war between the two countries in May 1998.
An international boundary commission has given the symbolic village to Eritrea.
Ethiopia says it supports the demarcation process and will continue to give full support to Unmee.
There are 4,200 troops from India, Jordan and Kenya patrolling the buffer zone across the mountains and deserts along the Ethiopia-Eritrea border.
Badme - the flashpoint that started the war
Ethiopia and Eritrea committed themselves to allowing an international tribunal decide where the border ran, when they signed the peace agreement that ended the war in December 2000.
The ruling was given last year.