ASMARA, Eritrea — Ethiopian forces drove deeper into Eritrea Saturday despite an agreement for peace talks, shelling a city 50 miles from their adversary's capital.

Civilians fled ahead of the Ethiopian move on the city of Adikeyhe, joining what Eritrea says are hundreds of thousands of others displaced by Ethiopia's 2-week-old offensive.

Witnesses reported civilians streaming in single-file lines along the two-lane asphalt road leading north of Adikeyhe. They also described government troops dismantling a ground-to-air missile battery on the outskirts of the city.

Government-commandeered trucks and buses also moved 20,000 displaced Eritreans to a schoolyard outside the town of Dibarwa, 22 miles south of the capital, said Yusef Feshaye, a local official for the state-run relief agency. As night fell across the arid, rocky landscape, women and children huddled around wood fires to ease the cold.

Farther south in Mandefera, Eritrean troops mingled among the newly homeless and residents wondered whether they, too, should flee.

"Whenever we see someone running away, we assume the enemy is coming. We're terrorized," said Mehari Gebrehiwet, a 39-year-old English teacher.

African diplomats announced Friday that Eritrea had agreed to resume peace talks and to surrender two key towns demanded by its Horn of Africa neighbor.

But Ethiopia insisted Saturday the offensive would stop only when it was satisfied Eritrea had truly withdrawn from all disputed land.

"Only the Ethiopian government will confirm Eritrea has pulled out from all occupied territory," government spokesman Haile Kiros Gessesse said at Makele, an air force base in northern Ethiopia. "We trust only ourselves."

"We do not believe this regime will really leave us alone without any further aggression," added Haile Kiros, the Ethiopian government spokesman.

On Saturday, the state interior ministry of Sudan — Eritrea's main border state besides Ethiopia — said it fears as many as 250,000 Eritrean refugees could flock to Sudan.

Sudan officially estimates that 35,000 Eritreans have poured into the country since Ethiopia invaded Eritrea on May 12. The U.N. High Commission for Refugees said Saturday it had registered 30,000 Eritrean refugees, but that only one-half of that number were actually in the Sudanese refugee camps.

Many Eritreans are returning home in the hope that the war will recede, said Paul Stromberg, a spokesman for the commission. Others, he said, crossed into Sudan, received aid and then headed back to tend to their livestock, which Sudanese law bans them from importing.

After invading Eritrea, Ethiopia said it would leave only after it had broken the Eritrean army and retaken all territory seized by Eritrea at the start of the 2-year-old border war.

Ethiopia's military routed Eritrea's forces from their border strongholds late in the week and has been chasing them north into Eritrea ever since.

On Saturday, Ethiopia said it had taken Adikeyhe, which would put its advance about 31 miles north of the border. But the witnesses said late Saturday that Ethiopian infantry had not yet seized the city.

The Ethiopian pursuit, and the Eritrean retreat, have followed the increasingly steep road leading to the Eritrean capital of Asmara.

Ethiopia, however, has never listed the Eritrean capital among its objectives. Ethiopian officials have said repeatedly they will return all undisputed Eritrean territory when their aims are met.

Eritrea agreed late Thursday to peace talks due to start Monday in Algiers, under the auspices of the Organization of African Unity.

The country also promised to give up by Monday two eastern towns, Bada and Bure, demanded by Ethiopia. While the towns were indisputably Eritrean, the Asmara government said, Eritrea wanted to deny Ethiopia all pretext for pressing the war.

Haile Kiros, the Ethiopian government spokesman, said Saturday that Eritrea continued to occupy Bada and Bure and scattered villages along the central front.

Eritrea complained in a statement late Friday that Ethiopia has never thoroughly specified which territory it considers illegally occupied.

Ethiopia and Eritrea, two of the world's poorest countries, have spent hundreds of millions of dollars arming and manning for the contest over their poorly delineated 600-mile border.