Eritrea is on the brink of a humanitarian crisis as civilians in the west of the country flee their homes in the face of the advancing Ethiopian army. At least 500,000 civilians are directly affected, according to Ertirean officials.
Ethiopian troops yesterday captured Barentu, a key town about 25 miles beyond the disputed border area, following sustained air-strikes and artillery bombardment. The Ertirean army was reported to have retreated to Keren, the last major town before the capital, Amsara.
As the fighting intensified the UN imposed a 12-month arms embargo on both sides. Diplomats acknowledged it will have little short-term impact on the fighting but argued it sent a strong political signal of international condemnation.
Ethiopia is pressing home the advantage it has enjoyed since starting the current offensive. Now its troops have effectively taken control of the western front line and are reported moving towards the more heavily fortified town of Zalambessa, at the centre of the 620-mile disputed border.
"We have completed the second phase of the operation. It is going very well and according to our plans," the Ethiopian Prime Minister, Mr Meles Zenawi, said in a BBC interview last night.
Eritrea appears to have been surprised by the ferocity of the attack and has pulled back thousands of troops. An Eritrean government statement, broadcast on state-run media, said Barentu was being evacuated to avoid loss of civilian life and the town's total destruction.
Neither side has released casualty figures. However, the numbers are thought to be considerably less than the 25,000 killed or injured that both countries claim to have inflicted on each other.
At least 550,000 people were fleeing the war-ravaged western area, Ertirean officials said. Most were heading east towards the town of Keren, where Eritrean troops were reported to be digging in.
The flood of fleeing civilians is creating a further humanitarian crisis in an area already hard-hit by prolonged drought. Yesterday the UN was forced to pull its staff out of refugee camps serving 200,000 people in the area after bombs fell nearby.
"Emergency food is needed desperately," said Mr Abraham Kahsai, a spokesman for the Eritrean Relief and Refugee Commission.
There is reported to be an atmosphere of shock in the Eritrean capital, Asmara, where the speed of the Ethiopian advance has caught people unawares after almost 12 months of stalemate. Ethiopia has now pushed beyond the disputed area and controls hundreds of kilometres of sovereign Eritrean territory.
Both sides rejected the UN arms embargo passed late on Wednesday night.
"It is not just. This has never been a border war. Ethiopia has used the border issue as a pretext to invade Eritrea," said Ertirean spokesman, Mr Yemane Ghebremeskel.
The US-sponsored embargo bans the sale of weapons, military vehicles or spare parts to either country, among the poorest in the world.
Ethiopia - which recently appealed for international aid to counter a prolonged drought - is estimated to spend $1 million (£885,000) a day on the war and probably much more during the present hostilities.
The Russians and French opposed the indefinite ban proposed by Britain and the US. Both Russia and France have supplied arms to either Ethiopia or Eritrea in the past, as have Bulgaria, China and Italy.
A compromise 12-month ban was agreed on Wednesday. It will be lifted immediately if the UN Secretary-General, Mr Kofi Annan, reports that "a peaceful definitive settlement of the conflict" has been concluded.