Eritrea has brushed off a US threat of sanctions and charged that Washington is fuelling the conflict in neighbouring Somalia by providing the country's government with tons of weapons and training.
On Thursday, US Secretary of State Hillary Clinton accused Eritrea of supporting the al-Shabab militant group.
Speaking in Kenya, Ms Clinton claimed that the militants were trying to launch worldwide terrorist attacks from Somalia.
She said: "It is long past time for Eritrea to cease its support for al-Shabab - we intend to take action if they do not."
Ms Clinton also said that Washington would boost military supplies and other aid to the Somali government and the African Union peacekeeping force supporting it.
The Obama administration plans to double an initial 40 tons of arms sent to Somalia via other African states.
Eritrea's Information Minister Ali Abdu described the allegations that his country supports al-Shabab as "baseless."
And Mr Abdu insisted that "you can't solve the Somali issue by sending weapons - 40 tons of weapons will produce only hatred."
