NAIROBI, Jan 27 (Reuters) - Last-ditch diplomatic efforts to resolve the conflict between Ethiopia and Eritrea are intensifying as the two countries appear to be moving ever closer to all-out war, diplomats said on Wednesday.

International pressure -- from Europe to the United States -- is mounting for Eritrea to withdraw from the contested border territory it invaded in May last year.

But after a heavy build-up of troops and artillery along the 1,000 km (600 mile) frontier, there is a sense in both capitals that a resumption of fighting is now almost inevitable after a seven-month lull.

President Daniel arap Moi of Kenya is expected to visit the Ethiopian capital Addis Ababa this week in an effort to prevent an outbreak of hostilities. Moi was in Asmara on Sunday.

``There are still quite a lot of initiatives that are going ahead, and while they are there, there is hope,'' said one diplomat in Addis Ababa.

``But there is a pretty depressing feeling to progress at the moment,'' he added. ``We are getting nearer to crunch time.''

Earlier this month, the Eritrean government said it had received intelligence reports warning that Ethiopia was about to attack between mid-January and mid-February.

Ethiopia denied the charge, countering this week with a similar claim about an imminent Eritrean attack and closing schools near the border.

Both sides say they are committed to peace. Yet patience in Addis Ababa at what the government sees as Eritrean intransigence is wearing thin.

``We have restrained ourselves and I don't know how long we can restrain ourselves,'' the Ethiopian ambassador to Kenya, Teshome Toga, told Reuters this week.

On Friday, a state-owned Ethiopian newspaper issued a stark warning to the Eritrean government to withdraw its troops from the contested border territories before it was too late.

``If ever there was an opportune moment for the Eritrean leadership to survive the danger of war, it is now or never,'' the Ethiopian Herald said in an editorial.

``Ethiopia and its entire people have never been as unified and resolute to defend their peace, uninterrupted development endeavours, democracy and sovereignty,'' said the paper, which usually reflects government thinking.

In a reaction to the rising tension, U.S. embassies in both capitals told non-essential staff they could leave last week, and advised American citizens to defer travel to the region.

President Bill Clinton, the Italian government and the U.N. Security Council in the last week all publicly expressed their concerns about a resumption of fighting, and urged both sides to accept a peace plan outlined by the Organisation for African Unity (OAU).

As Ethiopia has already accepted the plan, that call translates into a demand for Eritrea to withdraw from the contested territory it occupied in May last year.

Yet Eritrea rejects the OAU plan, or as it argues, is still seeking clarification of two clauses. In particular, it has called for international monitors to police the disputed border while ownership is being established.

It has also asked for clarification of whether Ethiopia accepts the 1908 colonial boundaries, drawn up in a final treaty between Ethiopia and the Italians who at that time occupied Eritrea.

Previous mediation efforts have yielded few tangible signs of progress. U.S. envoy Anthony Lake completed his fourth visit in as many months to the region last week, but failed to announce any breakthrough.

Ethiopia says the time has come to step up the pressure.

``We have come to the final stages of diplomacy,'' said ambassador Teshome. ``The international community must put meaningful and effective pressure on Eritrea.''

Hundreds of troops were killed in artillery battles on three fronts last year before fighting subsided with the onset of the rainy season in mid-June.

If either side does decide to attack, it would want to start well before the rains begin again this year, regional analysts say.

``They have violated our friendship and trust,'' said Teshome. ``If diplomacy fails, a country has no alternative but to defend itself.''