(Adds call for hostages release, paragraphs 11-12)

By Tsegaye Tadesse

ADDIS ABABA, March 29 (Reuters) - Ethiopia accused Eritrea on Thursday of arming anti-Ethiopian rebels and urged the United Nations to take action against its long-time Horn of Africa foe.

Eritrean officials were not immediately available to comment, but always deny such allegations.

Addis Ababa and Asmara have routinely fired harsh rhetoric at each other since a 1998-2000 border war killed 70,000 people. But tensions have risen in recent months amid conflict in neighbouring Somalia and a kidnapping near their frontier.

"The Eritrean government ... is now organising, arming and training anti-peace Ethiopian elements to carry out its proxy war and cause destruction in the country," Ethiopian Prime Minister Meles Zenawi told parliament on Thursday.

"The U.N. Security Council cannot ignore repeated acts of terrorism being perpetrated by one of its member nations."

The United Nations and Washington accused Eritrea of sending weapons and troops to militant Islamists who threatened to over-run Somalia's Ethiopian-backed government before being ousted in a two-week war over the New Year. Asmara denies it.

Meles said Eritrean forces had suffered a "humiliating defeat" in Somalia, and were now focused on infiltrating "rogue elements" into Ethiopia to plant bombs targeting civilians.

Addis Ababa was hit by several mysterious blasts last year. The government generally blames Eritrea or various rebel groups.

Meles also repeated Ethiopia's allegations that Asmara was behind the kidnapping of eight Ethiopians seized at gunpoint with five Europeans this month in Afar, northern Ethiopia.

The Europeans were freed in Eritrea after 12 days, but nothing has been heard of their guides. Eritrea's government denied playing any role in the abduction, and in turn accused Ethiopia of manipulating the incident to its own ends.

In Addis Ababa on Thursday, supporters of the eight hostages lambasted the international media, accusing it of forgetting about the story after the Europeans were freed.

"Let's be honest. The reason interest has dropped off is because five European captives is sexy news. Eight kidnapped Ethiopians isn't," said Tony Hickey, a friend of two of the abducted men. "It is just another African disaster story and people stop paying attention. ... It is a sort of racist issue." (Additional reporting by Andrew Heavens)

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