The United States on Friday paved the way for further sanctions to be imposed on parties to the conflict in northern Ethiopia, where thousands have been killed and millions are in need of humanitarian assistance.

A new executive order allows Washington to take punitive action against those in the Ethiopian and Eritrean governments, the Tigray People's Liberation Front (TPLF) and the Amhara regional government if they continue to pursue military conflict over negotiations, senior US administration officials said.

The move, which increases pressure on the parties to come to the negotiating table and bring an end to the fighting, comes after Washington has repeatedly called for a negotiated end to the conflict and for aid access to the northern region of Tigray, where the conflict began.

"Unless the parties take concrete steps to resolve the crisis, the administration is prepared to take aggressive actions under this new executive order to impose targeted sanctions against a wide range of individuals or entities," a senior administration official warned.

War broke out 10 months ago between Ethiopia's federal troops and forces loyal to the TPLF, which controls Tigray.

Since then, thousands have been killed and more than 2-million have fled their homes. Fighting spread in July from Tigray into the neighbouring regions of Amhara and Afar, also in the country's north. Fighting in those two regions has displaced hundreds of thousands of people and made about 1.7-million dependent on food aid.

Over 5-million more people within Tigray need humanitarian assistance but less than 10% of needed supplies have reached the region over the past month due to obstruction of aid, the official said, describing the situation as one of the "worst humanitarian and human rights crises in the world."

The US Treasury Department is also issuing general licenses to provide exemptions for development, humanitarian and other assistance, as well as for critical commercial activity in Ethiopia and Eritrea, to ensure the new sanctions do not harm those suffering from the conflict, the official added.

But the administration of President Joe Biden held back from imposing sanctions alongside the executive order in hopes that it provides incentive to move away from the military approach, another senior US administration official said.

The first official added that the administration expects significant discussion on Ethiopia next week during the annual high-level week of the United Nations General Assembly.

"Now is the time because we have been engaging for months on this and yet the situation has only deteriorated," the official said. "Now we believe that it's is necessary to raise the costs to parties continuing to profit from the war."