Another 18 of the Ethiopian rebels were wounded during a major military sweep in the remote north, Ethiopian News Agency (ENA) said on Tuesday, quoting the defence ministry.
Ministry officials could not immediately be reached, and there was no independent confirmation from the remote region of Ethiopia where various armed groups opposed to Meles Zenawi, the Ethiopian prime minister, are said to be operating.
A defence ministry official who declined to be named said the rebels were from a group known as the Patriotic Front.
Ethiopia, the major power in the Horn of Africa, has frequently accused its smaller neighbour Eritrea of backing, arming and harbouring a variety of insurgents.
Asmara says Ethiopia is inventing threats to justify oppression of its own people and belligerence towards Eritrea. The Horn of Africa nations have long been feuding over their border and went to war between 1998-2000, with 70,000 killed.
"Of the anti-peace group who crossed into Ethiopia at Quara, Armacheo and Metema in the north of the country from Eritrea recently, 111 have been decimated and 18 others were injured in a joint military action taken by the Ethiopian Defence Forces and the people of the region," ENA said in its report.
"Eighty six others were captured and 21 handed themselves to Ethiopian forces."
It was not clear exactly when the operations took place or which rebel groups were said to be involved.
Eritrea called the report a "total fabrication" intended to divert attention from Ethiopian troop movements on the border with Somalia, where Addis Ababa has watched the rise of Islamists in Mogadishu with nervousness.
Mogadishu's newly ruling Islamists have accused Ethiopia of sending soldiers over the border. Addis Ababa denies that.
"I know there are rebels inside Ethiopia, but this whole story is a total fabrication with the aim of diverting attention from their internal crisis and their incursion in Somalia"
Eritrean Information Minister
Ali Abdu, the Eritrean information minister, told Reuters in Nairobi by phone: "I know there are rebels inside Ethiopia, but this whole story is a total fabrication with the aim of diverting attention from their internal crisis and their incursion in Somalia.
"We have made it clear time and time again, we believe in mutual respect and non-interference, that is our foreign policy."
Abdu denied that Ethiopian rebels have a footing in Eritrea.
The ENA report named six rebel leaders it said had been killed in the fighting. The little-known Ethiopian Patriotic Front could not be reached immediately for comment.