Ethiopia and Eritrea have rejected a proposal put forward by an independent boundary commission to demarcate their disputed Horn of Africa border.
Dusty Badme was at the centre of the border dispute
Both countries boycotted a meeting at The Hague, which was to discuss plans to mark the border on UN maps rather than delineate it on the ground.
An Ethiopia spokesman said the planned demarcation would be "illegal", while Eritrea wants a physical demarcation.
The commission was set up following the end of the countries' 1998-2000 war.
Ethiopia has never accepted the boundary commission's decision to award the disputed town of Badme to Eritrea.
Tensions remain high and some fear conflict could reignite as the two countries are accused of backing rival sides in neighbouring Somali.
Dec 2000: Peace agreement
Apr 2002: Border ruling
Mar 2003: Ethiopian complaint over Badme rejected
Sep 2003: Ethiopia asks for new ruling
Feb 2005: UN concern at military build-up
Oct 2005: Eritrea restricts peacekeepers' activities
Nov 2005: UN sanctions threat if no compliance with 2000 deal
Eritrea backs the commission's proposals but insists that the border should be physically marked out.
"Eritrea's position is very clear: we have accepted the decision," Yemane Gebremeskel, the director of Eritrean President Isaias Afewerki's office told the AFP news agency.
"If Ethiopia obstructs the demarcation, the answer does not lie in accommodating or placating Ethiopia," he said. "The answer lies in taking appropriate measures against them."
"Ethiopia has informed the commission that its proposal, if implemented, would result in a decision void of any legal force or effect and therefore must be rejected," said a statement from Ethiopia's foreign ministry.
The United Nations Mission in Ethiopia and Eritrea (Unmee) has more than 2,000 troops in a buffer zone along the border.
Eritrea has placed restrictions on the UN operation since last year, calling for more international pressure to make Ethiopia withdraw from Badme.
More than 70,000 people died in the border conflict.