The UN Security Council says Eritrea has failed to fulfil its obligation to withdraw troops from part of Djibouti.
It passed a resolution in January which gave Eritrea five weeks to pull its soldiers out of a disputed region on the border between the two countries.
Eritrea rejects any suggestions that its troops are on Djiboutian territory.
The UN ambassador of Mexico - which holds the Council's rotating presidency - said Eritrea had also failed to begin peace talks with its neighbour.
Claude Heller told the 15-member Council on Tuesday he would meet Eritrean representatives to express the UN's concerns.
Djibouti's UN Ambassador, Roble Olhaye, in a letter to the Council, accused Eritrea of "utter intransigence", reported Associated Press news agency.
January's French-drafted UN resolution demanded Eritrea "comply immediately" with the request to pull out its troops.
The same resolution noted that Djibouti had pulled out its forces from the disputed areas.
In June last year, several days of clashes between the two states left a number of Djibouti's soldiers dead in the disputed Ras Doumeira promontory on the shores of the Red Sea.
Perched on the strategically important Horn of Africa, Djibouti is home to France's largest military base in the continent.
The US has more than 1,200 troops there as part of its anti-terrorism task force in the Horn of Africa.
Since Eritrea gained independence in 1993, the Horn of Africa country has been involved in two serious conflicts over territory with its neighbours.