Earlier this week, Djibouti appealed to the UN Security Council to intervene in order to prevent a conflict over the border village of Doumeira.
In a letter to the UN, Djibouti alleged Eritrea had published new maps showing Doumeira as Eritrean territory.
Grirma Asmerom, Eritrea’s ambassador to the European Union, told the BBC he knew nothing about the letter.
Since Eritrea gained independence in 1993, the country has been involved in two serious conflicts over territory with its neighbours.
‘Real threat’
BBC Somali Service editor Yusuf Garaad Omar says Djibouti’s interpretation of events is alarming.
He said Doumeira is a small border village of little strategic importance home to ethnic Afar people.
“The sudden growth of troops calls for real intervention by the international community because we see it as a real threat,” Djibouti’s ambassador to the UN Roble Olhaye told the BBC’s Network Africa programme.
“We wanted to urge the Security Council to take all necessary measures to prevent any kind of conflagration because the prospect of a real war is there.”
But Mr Asmerom said he was bemused by such accusations.
“There is no such problem with Djibouti; we have never had a problem with Djibouti,” he said.
In 1995, Eritrea clashed with Yemen over the Hanish islands in the Red Sea – one of the world’s major shipping lanes.
Three years later, Ethiopia and Eritrea fought a two-year war over the border town of Badme, in which tens of thousands of people died.
Djibouti and Eritrea clashed twice over their mutual border in the 1990s and nearly went to war.
Both US and France have military bases in Djibouti.