The Eritrean Government has called on the international community to put pressure on Ethiopia to abide by the ruling of the independent commission deciding where the border between the two countries lies.
A government spokesman told the BBC's Jonah Fisher in Asmara that Ethiopia's statement - that the commission's latest ruling was unacceptable - would have "grave consequences".
Hundreds of thousands were left homeless
Yemane Ghebremeskel said by rejecting the commission's latest report - that awarded the disputed border village of Badme to Eritrea - Ethiopia was violating the sanctity of colonial boundaries which was a fundamental principle in Africa.
The physical demarcation of the border is expected to begin in July.
Although Ethiopian has expressed its regrets over the Badme ruling, it has not openly rejected it.
The village of Badme ignited a bloody two and a half year war between the two countries in May 1998.
"I would expect that there would be measures from the United Nations Security Council, from the OAU or the African Union to persuade Ethiopia to abide by the Commission's decisions, Mr Ghebremeskel said.
"But if Ethiopia does not do that (comply), there will be consequences. I do not want to speculate on that now but that decision will be extremely grave and a very dangerous decision."
The bitter war formally ended with the signing of the Algiers peace agreement in December 2000.
The agreement established the boundary commission to decide once and for all where the border lies, and both countries promised to abide by the decision.
But Ethiopia said that the boundary commission did not stick to its mandate as defined in Algiers, and hopes that now it will rectify its mistakes.
The BBC's correspondent in Addis Ababa Damian Zane says it is hard to see what would lead Addis Ababa into accepting that Badme is part of Eritrea.
He added that it would be a bitter pill for the government to swallow and the government has also said the people will not accept it.
The boundary commission judgement's was based on treaties, maps and historical reality.
Ethiopia had, before the war, administered the Badme but Eritrea sent its troops to the village, claiming it as part of its territory.
Thousands lost their lives and hundreds of thousands more from both sides were displaced.