The Ethiopian government says it has accepted "in principle" a long-disputed ruling on its border with Eritrea but still thinks it is illegal and unjust.
Tens of thousands died in the border war
Prime Minister Meles Zenawi presented the decision to MPs for approval, saying his country wanted dialogue to implement the pact.
The Eritrean government has dismissed the move as "public relations".
Ethiopia previously rejected the border drawn up by an international commission saying it could cause future conflict.
Disagreements have centred on the town of Badme, which was awarded to Eritrea.
Mr Meles said Ethiopia wished to send an envoy to implement the agreement that settled the two-year war between the two countries, which ended in 2000.
In response, Eritrea's information ministry said the boundary commission's original decision was "final and binding".
It dismissed Ethiopia's proposals as "aimed at promoting public relations exercises and buying more time" which, it said, only prolonged the suffering of both countries' people.
Reports suggest Nigeria President Olusegun Obasanjo may have intervened recently, as current chair of the African Union, on the sidelines of a recent summit in Algeria.
Ethiopia initially accepted the pact, but later reversed its stance, saying it was protecting the rights of Badme's Ethiopian residents to remain in Ethiopia. Badme was the flashpoint that triggered the war.
Mr Meles told parliament that his government wants the decision implemented in "a manner consistent with the promotion of sustainable peace and brotherly ties between the two peoples".
He said dialogue should start swiftly and that Eritrea should also give and take, the BBC's Mohammed Adow in Addis Ababa says.
The conflict cost tens of thousands of lives and left many more people homeless.
Ethiopia's rejection of the boundary commission's decision left the peace process in limbo, as UN peacekeepers were unable to physically map out the border.
Ethiopia and Eritrea agreed a peace pact in December 2000 in Algiers. The treaty created the Eritrea-Ethiopia boundary commission under the auspices of an international court in The Hague.
Both sides had pledged to accept its decisions, but Ethiopia refused to do so, saying the commission had failed to stick it its brief.
Most of the border is set by rivers, but this is not the case around Badme, where Italian colonial powers drew a land border in 1902.
Eritrea's independence from Ethiopia in 1993 led to questions over the colonial border.
The war began when Eritrean troops invaded Badme, which was under Ethiopian administration.