By Irwin Arieff

UNITED NATIONS, Jan 16 (Reuters) - The U.N. Security Council, frustrated by the long-stalled peace process between Ethiopia and Eritrea, is leaning toward more cutbacks in the peacekeeping force monitoring their shared border, diplomats said on Tuesday.

Most members of the 15-nation council support cutting the force to 1,700 from its current 2,300, although some African states worry that too few peacekeepers could risk a new flare-up in the 1998-2000 border war between the Horn of Africa neighbors that killed 70,000 people, the diplomats said.

The council in May 2006 trimmed the peacekeeping force to 2,300 troops from 3,300.

U.N. troops were first sent to Ethiopia and Eritrea in 2000 to enforce the cease-fire ending their border conflict.

As part of the peace agreement, both countries pledged to accept a new border as set out by an international commission.

But the new border has never been marked out after Ethiopia rejected part of it and Eritrea objected that Ethiopia was not being held to its word, leading to a four-year impasse.

The volatile Horn region has grown even shakier since Ethiopia last month poured troops into Somalia to drive out Islamist forces, backed by Eritrea, that had seized much of the country's south, and the United States bombed suspected al Qaeda targets near Somalia's border with Kenya.

Council members said they had asked Belgian Ambassador Johan Verbeke to draft a resolution by the end of the month renewing the U.N. peacekeeping mission's mandate while reducing authorized troop levels by 600.

The current mandate is due to expire on Jan. 31.

In a resolution adopted last September, the council had warned Ethiopia and Eritrea that it intended to downsize the peacekeeping mission by the end of January if it saw no "demonstrated progress" on marking out the border.

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