[ossiblue]

It's kind of hard to determine from your picture and diagram just what kind of erosion is happening, but it seems to be surface erosion caused by water/runoff. Stabilizing of the slope at the base will not address that issue unless you change the angle of the slope by back fill, as you originally proposed.

Looking at the diagram, I assume the upper portion (above the green) is stable with no surface erosion but the lower portion has a much greater slope angle and that's where you are losing surface soil. If that's correct, then changing the slope angle by retaining and filling will work, along with planting erosion resistant vegetation and directing runoff around or under the bottom slope.

If you are getting bedrock slippage with fissures and deep cracks appearing due to soil movement (as opposed to surface erosion), that's a more serious issue and would require solid retaining at the foot of the slope. Interlocking concrete blocks are widely used to support hillsides of various heights and would work well in your situation. However, in some situations a concrete footing is necessary before the blocks are installed so that may complicate that choice if you decide to go that route.