The African Union (AU) said Friday it remains engaged in the border crisis between Eritrea and Ethiopia but said the two parties lack goodwill to bring an end to the dispute. A United Nations mission monitoring the disputed frontier since the end of a 1998-2000 border war fought between the neighbouring foes began relocating to the Eritrean capital Asmara last week after their fuel and food supplies were cut by Eritrea.

"We are still there. The two parties are failing to arrive to a solution in spite of what we are doing," said newly-elected AU chairman Jean Ping. "There is lack of goodwill to work toward a resolution."

Tiny Eritrea gained independence from Ethiopia in 1993, but the disputed border town of Badme remained under contention and sparked the war that killed some 70,000 people.

A border demarcation commission dissolved itself last year because the two Horn of Africa countries were unable to find a solution.

The frontier remains tense and with the withdrawal of the several thousand UN troops, observers fear a new war may break out.