Ethiopian government forces have advanced to Zalambessa, a town near the Eritrean border previously held by Tigrayan rebels, sources said on Tuesday. The move comes as diplomats work to prevent a wider conflict between the two Horn of Africa neighbours.

Witnesses and a conflict monitor said Eritrean troops crossed into Zalambessa last week to support the rebels. However, it remains unclear whether Eritrean forces or the rebels were still in the town on Tuesday.

Eritrea has denied entering Ethiopia and urged the United Nations to take deterrent measures against Ethiopia. It said Addis Ababa's accusations of an invasion by Eritrean forces amounted to a "declaration of war".

Fighting resumed in Ethiopia last month when a rebel alliance led by the Tigray People's Liberation Front (TPLF) launched an offensive. The clashes have reignited tensions following the 2020-2022 war, which killed hundreds of thousands of people.

Ethiopian government forces have since launched a counter-offensive, pushing rebels out of several towns and forcing them to retreat north. By Tuesday, the army had reached Zalambessa, a town of around 15,000 people on the Ethiopian side of the border, according to six sources. They included four people in contact with residents, a diplomat and a conflict expert in touch with the warring parties.

A spokesperson for a pro-government militia did not confirm that the army had taken control of the town. Spokespeople for Ethiopia's military and Prime Minister Abiy Ahmed did not immediately respond to requests for comment.

The renewed fighting has raised concerns about a wider regional conflict, with tensions also running high across the Red Sea and violence affecting other parts of the region.

Ethiopia and Eritrea ended years of conflict with a peace agreement in 2018. Eritrea later supported Ethiopia's federal government during the 2020-2022 civil war in Tigray. However, relations between the two countries have deteriorated again.

Ethiopia has accused Eritrea of supporting the rebels and told UN Security Council members that Eritrean troops had advanced up to 60 km (37 miles) inside its territory.

Eritrean Foreign Minister Osman Saleh has urged the Security Council to act against Ethiopia in a letter seen by Reuters. He invoked Chapter VII of the UN Charter, which allows measures ranging from sanctions to military action.

The Security Council was scheduled to hold a closed-door meeting on the Horn of Africa situation on Tuesday, according to the Greek presidency of the council.

Access to the sea remains another source of tension. Ethiopia had a coastline for decades before Eritrea gained independence in 1993. Addis Ababa considers restoring sea access an existential issue but says it seeks to achieve this through peace and dialogue.