Ethiopia and Somalia have agreed to end their bitter dispute over Addis Ababa's plans to build a port in the breakaway republic of Somaliland following talks in Turkey.

Turkish President Recep Tayyip Erdogan welcomed the "historic agreement", which he said would eventually ensure landlocked Ethiopia's access to the sea.

At the press conference he held hands with Ethiopian Prime Minister Abiy Ahmed and Somali President Hassan Sheikh Mohamud, who both agreed to respect one another's "sovereignty".

The two neighbours have been at loggerheads since January when Ethiopia signed a maritime deal with Somaliland - which Somalia considers as part of its territory.

It prompted fears of a wider regional conflict as Egypt has been backing Somalia - largely due to its anger with Ethiopia for building a dam on the River Nile.

Turkey has in recent years become an important geopolitical player in the Horn of Africa as it has close economic ties with Addis Ababa and security deals with Mogadishu.