Drought also has triggered food shortages in neighbouring Kenya and Somalia, a country that has had no effective government since warlords overthrew dictator Mohamed Siad Barre in 1994.
Pre-famine conditions have already emerged in Ethiopia's eastern Somali region, including escalating malnutrition and reports of child deaths; tribal conflicts over scarce resources; early and widespread human and livestock migration; slaughtering of calves to save cows and rising sorghum prices.
The US-funded Famine Early Warning Systems Network says that a preliminary assessment showed more than a million people will face serious water, pasture and food shortages for the first half of 2006.
The crisis will peak from January to March, according to the food security monitoring group.
The Somali region, which is the size of Britain, is one of the driest and least hospitable areas in Ethiopia.
The area was hit by catastrophic famine in 2000 that killed an estimated 50,000 people.
An initial estimate from the regional Disaster Preparedness and Prevention Administration indicates Ethiopia needs more than $A54.7 million to provide emergency water, fodder and health care to people and animals affected by the drought.