The UN Security Council said in a statement on Wednesday that the world body would "temporarily relocate" military and civilian staff from Eritrea to Ethiopia in the interests of safety.
Last week, Eritrea ordered out peacekeepers from the US, Canada and Europe.
The decision affects some 180 military observers and civilian logistics staff, but the UN said on Thursday that roughly 20 extra staff from other nationalities would also be leaving. The deadline for their departure is Friday.
"It is confused," said one UN staff member when asked about the mood inside the so-called Green Building of the UN Mission in Ethiopia and Eritrea (UNMEE) in Asmara.
Jean-Marie Guehenno, the head of UN peacekeeping, arrived in Eritrea late on Monday in a last-ditch effort to resolve the crisis. But by Wednesday, he still had not had a meeting with Eritrean officials.
The order for peacekeepers to leave within 10 days will stymie the UN operation to monitor the tense Eritrea-Ethiopia border, where a war killed 70,000 people between 1998 and 2000.
India and Jordan are the main
contributors to the UN force
The Eritrean move was widely viewed as a sign of frustration that the international community has done little to force Ethiopia to implement demarcation of their common border.
In a peace deal struck in 2000, the two countries agreed an independent commission would decide on where their border should be, but Ethiopia later rejected the ruling.
The Security Council's statement emphasised the "urgent need" for progress in implementing the commission's decision.
John Bolton, the US ambassador to the UN, said earlier that the council should consider withdrawing all the troops and questioned whether the operation should continue because Ethiopia, as well as Eritrea, was making unreasonable demands.
India and Jordan are the main contributors to the 3300-strong peacekeeping mission.