The conflict began in April around 400 kilometres (250 miles) south of the capital Addis Ababa. More than 1.2 million people have been forced to flee since, the UN report says.
Violence in southern Ethiopia since June has forced more than 800,000 people to flee their homes and they need food and other aid, a report by the United Nations and the government said on Wednesday.
The violence erupted in April around 400 kilometres (250 miles) south of the capital and in all more than 1.2 million people have been forced to flee, the report said.
"Renewed violence along the border areas of Gedeo and West Guji zones since early June ... has led to the displacement of over 642,152 IDP's (internally displaced persons) in Gedeo zone ... and 176,098 IDP's in West Guji zone of Oromia region." the report said.
Though traditional leaders encouraged the movement of people back to their homes after the initial fighting in April, many fled again in June, the report said.
Diplomats said more than 200 people were killed during the last month but said the figure was an estimate because a lack of security made confirmation impossible.
The fighting is one of several ethnic conflicts fuelled by grievances over land in Ethiopia, Africa's second-largest country by population.
Last year, dozens died in violence between people from the Somali and Oromo ethnic groups. Hundreds of thousands of people fled their homes and have yet to return.
Ethiopia is an ethnically diverse country of 100 million people and ethnic discontent helped fuel protests that led to the resignation of prime minister Hailemariam Desalegn in February.
New Prime Minister Abiy Ahmed, who took office in April, has pledged political and economic reforms to address complaints of marginalisation by a number of ethnic groups including his own group, the Oromos.
Ethiopia's ruling coalition took power in 1991 and has created regional states based on ethnicity in a federal republic.