Ethiopia's leader publicy admitted yesterday that his country's position on two warfronts is becoming desperate and said it is racing against time to recapture disputed areas.

But Lt Col. Mengistu Haile Martam, chairman of Ethiopia's ruling military council nevertheless insisted in a broadcast speech that Ethiopia would ruthlessly destroy all it's enemoies in the south-estern and northern parts of the country.

Ethiopian troops suffered a defeat, however, in the north when Eitrean separatist guerillas captured the strategic town of Mandafara and encircled the Red Sea port of Massawa yesterday. The guierrillas also cut the main highway from Massawa, forcing supplies to be flown into Asmara, Eritrea's capital.

A guerrilla spokeman said Mandafara fell after two weeks of fierce fighting to forces of the Eritrean Liberation Front-revolutionary Council, one of three guerrilla movements struggling for independence for the Red Sea province.

The capture of Mandafara leaves only three cities in Eritrea - Asmara, Bassawa and another Red Sea port, Assab - under the control of the Ethiopian army. Ethiopia's hold on the three cities is reportedly tenous, with guerrillas moving into and out of Asmara freely after dark.

The fall of Assab abd massawa could mean disaster for ethiopians since the two ports ase the country's only direct outlets to the sea. A former outlet, the railway line to Djibouti, newly independent from France, leads through the Ogaden war zone in the southeast, and has been closed for several weeks.

Fighting reportedly continued in the Ogaden, where Somali insurgents claim to control 97 per cent of the area.

last week and early this week the guerrillas tried to storm Dire Dawa Ethiopian's third-largest city, but according to Ethiopiam military communiques, they were beaten back with heavy losses.

The fighting has shifted nearly a hundred miles to the west near Jigiga, diplomatic sources said . Jigjiga, Dire Dawa, ahd harrar are Ethiopian's lastn bastion in the Ogaden.

Ethiopia has charged the Somali goverment with engineering the "invasion" of the Ogaden to annex it.

Somali has denied this, saying the fighting is being done by guerrillas of the Western Somali's Libertion Front, a group made up of ethic Somali's who are from the Ogaden.

A Somali leader indicted, however, that the Ogaden would be united with Somali after a people congress