Egypt's president has warned that "all options are open" in dealing with Ethiopia's efforts to build a dam that threatens to leave Nile-dependent Egypt with a dangerous water shortage.

In a live televised speech Monday before hundreds of supporters, Mohammed Morsi said Egypt is not calling for war. but his country is "ready to defend" its water security.

"Our blood is the alternative," Morsi said, and the crowd erupted in applause.

The crisis started last month when Ethiopia diverted the flow of the Blue Nile, one of the Nile's sources, to make way for construction of the dam. The move took Egypt by surprise.

Morsi says Egypt does not wish harm upon any nation, but that the lives of all Egyptians are connected to the Nile River.