Ethiopian forces have launched a military assault on positions inside Eritrea, Ethiopian officials have said.
Ethiopia attacked because Eritrea was training "subversive groups" to carry out attacks inside Ethiopia, government spokesman Shimeles Kemal said.
A number of people were killed and others captured when three camps were attacked, a defence official said. Eritrea has not yet commented.
The two countries fought a border war from 1998 to 2000.
Thursday's dawn assault is the first attack by Ethiopian troops inside Eritrean territory since the end of the war in which 80,000 people died.
Tensions have risen in recent weeks - with Addis Ababa blaming Eritrea for backing Ethiopian rebels who staged a January raid in the northern Afar region that killed five Western tourists.
Two German nationals were taken hostage during that attack - there has been no official word of their condition since.