Citing authorities in Doolo, located in the southeastern tip of the country, more than 1,300 kilometres (more than 800 miles) from the capital Addis Ababa, the UN refugee agency said it believes more than 98,000 people have crossed the border since February 6.
"We will substantiate numbers," Tesfahun Gobezay, director general of the Refugees and Returnees Service (RRS), an Ethiopian government agency which has started registering the arrivals, told reporters.
"This is an area that is lacking infrastructure and social development and of course coped with drought that has lasted for four years but they have shown us that we can still be considerate to others," continued Tesfahun.
"Even before we were able to arrive they were the ones who were sheltering them in their homes, who were sharing the minimum food they are having."
So far, 29,000 refugees have been registered, according to Mamadou Dian Balde, the UNHCR representative in Ethiopia.
"These numbers are growing, and growing, and growing," Dian Balde said, adding they were "women and children mostly".
"They do not have shelters, they need food, they need water, they need medical support and these needs are quite urgent," he continued.
"It's not people who want to stay in that refugee situation, they want to go home."
If the numbers are confirmed the refugees could swell the population of the three districts concerned by 40 percent, with around 236,000 people already suffering severely from the drought affecting the Horn of Africa.
A former British protectorate, Somaliland has claimed independence from Somalia since 1991 but has never been recognised internationally and is usually seen as a beacon of stability in a chaotic region.
Political tensions, however, have surged in recent months, leading to deadly violence between government forces and militias loyal to Somalia.
Ethiopia, with a population of around 120 million, is already hosting an estimated 880,000 refugees, mostly from South Sudan, Somalia, Eritrea and Sudan, according to UNHCR.
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