ASMARA, Jan 16 (Reuters) - Eritrea has accepted a "virtual demarcation" of its border with Ethiopia and wants Addis Ababa to remove its troops from Eritrean soil, a statement published on Wednesday said.

The two nations have been deadlocked over a 1,000 km (620 mile) border since a 2002 decision by an independent boundary commission gave the flashpoint town of Badme to Eritrea.

The Hague-based commission -- set up by a peace deal ending the 1998-2000 war -- "virtually" demarcated the border late last year based on the 2002 decision after the two sides failed to come to an agreement on their shared frontier.

"Now after five years of revolving around the basic problem, the matter has finally been resolved through a virtual demarcation of the border," said a statement in the English-language Eritrea Profile newspaper.

Ethiopian officials were not immediately available.

No territory has changed hands since the demarcation and thousands of troops still face each other along the common border.

In the statement, Eritrea said it would pursue legal measures to evict Ethiopian soldiers from territory awarded to Asmara by the 2002 ruling.

"However, if legal proceedings do not result in the appropriate outcome, then the Eritrean people have other internationally approved choices," the bi-weekly, government-owned paper said, without describing what those options were.

Analysts and diplomats fear an incident along the frontier could spiral out of control and provoke a full-scale war.

Ethiopia had initially rejected the 2002 ruling. It now says it unconditionally accepts the decision, but wants more talks, which Eritrea dismisses.

Ethiopia has dismissed the "virtual" demarcation as "invalid" under international law.

Asmara has repeatedly said Addis Ababa was planning to invade -- a charge Ethiopia ridicules. (Reporting by Jack Kimball, editing by Helen Nyambura-Mwaura and Mary Gabriel)

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