Ethiopia and Egypt said Tuesday they have agreed to hold further talks on the impact of a huge Ethiopian dam project to quell tensions between the two countries over water-sharing.

"We agreed that we will start immediately on consultations at both the technical level... and the political level," Egyptian Foreign Minister Mohamed Kamel Amr told reporters after meetings in Addis Ababa with his Ethiopian counterpart Tedros Adhanom.

The countries have been embroiled in a heated row after Ethiopia began diverting the Blue Nile River last month for the construction of the 6,000 megawatt Grand Renaissance Dam.

Egyptian President Mohamed Morsi warned this month that "all options are open" over construction of the dam because of concerns about the impact on downstream water levels.

But Amr and Tedros said relations between the two countries remain "brotherly" and that they will continue talks on the impact of the dam.

Amr said previous statements had been made "in the heat of the moment".

"Both ministers stressed the need to continue the dialogue and communication with each other," they said in a joint statement.

"We have two options, either to swim or sink together. I think Ethiopia chooses, and so does Egypt, to swim together," Tedros said.

An international panel has issued a report outlining the dam's impact on water levels.

The report has not been made public, but Ethiopia has said the report confirms that the impact on water levels are minimal.

Both nations agreed to "ask for further studies to ascertain the effects of the dam, not only the safety of the dam, the environmental effects, but also the effects of the dam on the downstream countries," Amr said, adding that consultations involve Sudan as well as Ethiopia and Egypt.

Some 86 percent of Nile water flowing to Egypt originates from the Blue Nile out of Ethiopia, and Cairo has said the construction of the dam is a security concern.

Ethiopia's parliament ratified a controversial treaty last week ensuring its access to Nile water resources, replacing a colonial-era agreement that granted Egypt and Sudan the majority of water rights.

The new deal allows upstream countries to implement irrigation and hydropower projects without first seeking Egypt's approval.

Ethiopia is building the $4.2 billion (3.2 billion euro) Grand Renaissance Dam in order to generate electricity for export to neighbouring countries, including Kenya and Djibouti.

It is set to become Africa's biggest hydroelectric dam, with completion earmarked for 2017, and is being funded entirely from internal resources.

The Blue Nile joins the White Nile in the Sudanese capital Khartoum to form the Nile, which then flows through Egypt.

Politics over Nile waters are complex, with its basin including 11 countries with the river travelling some 6,695 kilometres (4,160 miles) from headwaters in Rwanda and Burundi to the Mediterranean, according to the regional Nile Basin Initiative (NBI).

Ministers from the 10-nation NBI are due to meet Thursday in the South Sudanese capital Juba for annual talks "on the status of the Nile cooperation and how to move it forward", according to a statement from the organisation.