Each side said it had won, and accused the other of having gone on the offensive.

Eritrea claimed to have shot down a helicopter gunship.

In Addis Ababa, the Ethiopian government issued a statement saying the fighting started on Saturday, with four Eritrean brigades (about 12,000 soldiers) attacking Ethiopian positions near the Mereb River, on the eastern salient of the western front.

It said the Ethiopian troops repulsed the attack on Monday after killing more than 400 Eritrean soldiers and wounding more than 1,500.

"The Ethiopian defences forces successfully repelled the attack," it said, adding that the Ethiopian forces had captured "heavy and light armament," but giving no figures for Ethiopian casualties.

Ethiopian aircraft took part in the action, causing "heavy losses to the Eritreans," it added.

But Eritrean presidential chief of staff Yemane Ghebremeskal told AFP by telephone from Asmara that the Ethiopians had attacked in division strength (about 7,000 to 11,000 men) on Friday.

The main battle lasted until Sunday, he said.

"They tried again today (Monday), bringing in two helicopters," he said. "Our troops shot one down -- an MI-35 -- and the fighting soon died down."

During the four days of fighting, Ghebremeskel said, "our troops killed 380 Ethiopian soldiers, wounded 975, and captured 11."

Ghebremeskel said he had no precise figures for Eritrean casualties, but characterised them as "very light," because, he said, it was the Ethiopians who had gone on the attack.

He said the Eritrean force on the Mereb River was probably somewhere between one and three 3,000-strong brigades.

In Asmara, meanwhile, Eritreans on Monday celebrated the eighth anniversary of their capture of the capital at the end of their 30-year war of independence from their huge neighbour, when they joined with Ethiopian Tigrayan rebels to overthrow Ethiopian dictator Mengistu Haile Mariam.

Ghebremesekel said the residents of the capital celebrated with music, dances, acrobats, soldiers showing the flag, and an overflight by the Eritrean air force.

The two Horn of Africa neighbours first went to war over the ill-defined border in May last year.

Fighting -- characterised by intense battles interspersed with long lulls -- has continued since.

All diplomatic efforts to end the crisis have proved fruitless so far.

Both sides have accepted an Organisation of African Unity peace plan which provides for the deployment of peacekeepers and neutral delineation of the 1,000-kilometre (600-mile) -long frontier, but it has stalled because Ethiopia insists that Eritrea must first withdraw from all disputed territory.

Eritrea maintains the withdrawal applies only to the Badme region on the western front, which Ethiopian troops reoccupied in February after fierce fighting which both sides say left thousands dead.

Ethiopian government spokeswoman Selome Taddesse said four Eritrean brigades attacked Ethiopian positions on the western front close to the Mereb River Saturday and Sunday.

``Ethiopian defense forces successfully repelled the attack, killing more than 400 Eritrean soldiers and wounding 1,500,'' Selome said.

Selome said Ethiopian used aircraft in the counter-attack and captured various heavy and light weapons from the Eritreans.

There was no independent confirmation of Ethiopia's claims and no immediate comment from Eritrea which Monday was celebrating eight years of independence from its larger southern neighbor.

The two countries at first enjoyed friendly relations but a long running disagreement over the demarcation of their 1,000 km (600 mile) border boiled over into violence in May last year.

Tens of thousands of soldiers have since been killed in sporadic trench battles on three fronts. One of the bloodiest took place in February when Ethiopia drove Eritrean forces out of the disputed western border territory of Badme.

For the past year, Eritrea has been at war with Ethiopia over the demarcation of their 620-mile border -- a conflict that has killed tens of thousands of soldiers and dozens of civilians.

After Ethiopian warplanes bombed Eritrea's Red Sea port of Massawa on May 16, residents feared an attack on the capital -- a concern heightened by the local media, which said Ethiopia had threatened to mark the day with bomb strikes.

Nevertheless, more than 100,000 people took to the main street Sunday night to dance to music blaring on loudspeakers and watch a fireworks display that ushered in independence day at midnight.

``The Ethiopian regime said they would bomb us on the 24th, but if they do, it would not matter, it would only encourage us,'' said Hurui Emmanuel, a student who has four brothers fighting at the front.

Eritrean MiG 29 fighter jets patrolled the skies over Asmara Sunday and Monday to deter potential attacks.

After a 30-year struggle, Eritrean rebels liberated Asmara from Ethiopian rule on May 24, 1991. Just a few days later, Ethiopian rebels, with the help of their Eritrean counterparts, took the Ethiopian capital Addis Ababa, ending the 17-year Marxist dictatorship of Mengistu Haile Mariam.

The new government in Addis Ababa immediately recognized Eritrean independence, which was formalized by a U.N.-supervised referendum in 1993.

But the initially warm relations between the allies turned sour and the border dispute flared into violence on May 6, 1998.

Meanwhile, Ethiopia said it had repelled an Eritrean offensive.

Eritrea won independence from Ethiopia in 1991 following a prolonged war in which Eritrean freedom fighters helped propel Ethiopia's current government to power. Independence was formally declared in 1993 following a national referendum.

But the good relations that grew out of that struggle turned sour, and in May 1998 the two Horn of Africa nations began fighting over disputed regions along their mostly barren and badly demarcated 620-mile border.

Tens of thousands of troops and hundreds of civilians have been killed since the start of the war and more than half a million residents of border regions have been driven from their homes.

"All peaceful efforts have not produced any results to date," Eritrean President Isaias Afwerki told about 9,000 people gathered in the soccer stadium in the capital, Asmara.

Thousands gathered Sunday night on Asmara's palm-lined main thoroughfare to mark the independence anniversary despite fear of possible Ethiopian bombings.

In the Ethiopian capital Addis Ababa, government spokeswoman Selome Tadesse said Monday that Eritrean forces had attacked Ethiopian positions over the weekend but were repelled and roundly defeated.

"Eritrea launched the attack in hopes of boosting the morale of the Eritrean people and armed forces as they celebrate the eighth anniversary of their liberation day on May 24," Selome said.

She said the Ethiopians killed 400 Eritrean soldiers and wounded another 1,500 when, with the assistance of Ethiopian fighter planes, they pushed back four Eritrean brigades on Saturday and Sunday at the western Badme front.