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Ethiopia and Egypt have traded blame for the failure of a fourth round of negotiations aimed at resolving a long-running dispute over a controversial mega-dam built by Addis Ababa on the Nile.

Negotiations between Ethiopia and downstream neighbours Egypt and Sudan have yet to produce an agreement since construction of the $4.2 billion project began in 2011.

Egypt and Sudan fear the massive Grand Ethiopian Renaissance Dam will severely reduce the share of Nile water they receive, potentially causing drought and famine, and have repeatedly asked Addis Ababa to stop filling it until an agreement was reached.

A fourth round of talks was held between Sunday and Tuesday in the Ethiopian capital.

The Egyptian Ministry of Water Resources and Irrigation said in a statement late Tuesday that the talks failed due to Ethiopia's "persistent refusal... to accept any of the technical or legal compromise solutions that would safeguard the interests of all three countries."

"It has become evident that Ethiopia elects to continue exploiting the negotiation process as a cover to solidify a fait accompli on the ground," the statement said.

The ministry added that Egypt would closely monitor the ongoing filling operation and reserves the right to "defend its water and national security in the event of harm."

The dam is central to Ethiopia's development plans, and in February 2022 Addis Ababa announced that it had begun generating electricity for the first time.

At full capacity, the huge dam - 1.8 kilometres long and 145 metres high - could generate more than 5,000 megawatts.

Ethiopia's foreign ministry said it has "keenly engaged" with its two neighbours "to address the major issues of difference and reach an amicable agreement."

It added that Egypt kept a "colonial era mentality and erected roadblocks against efforts toward convergence."

Ethiopia said it is still committed to reaching "an amicable and negotiated settlement that addresses the interests of the three countries, and looks forward the resumption of the negotiation."

At loggerheads for years over the issue, Egyptian President Abdel Fattah al-Sisi and Ethiopian Prime Minister Abiy Ahmed agreed in July to finalise a deal within four months, resuming talks in August.