The clashes, sparked by a local dispute, highlight the tension in an area claimed by both Khartoum and South Sudan. More than three years after a 2005 peace deal, they have not agreed on borders or a local government for the region.

Sporadic gunfire could be heard on the second day of clashes and smoke rose from the town.

"Most of the civilians have left town. There are about 25,000 east of Abyei," said Malony Tong, a local official from the former southern rebel Sudan People's Liberation Movement (SPLM). "It is not calm".

Around 50 civilians sought refuge at the gates of the U.N. peacekeeping compound and were eventually allowed to enter. International U.N. staff were being evacuated.

Moussa Malei, deputy administrator of Abyei, said the two sides had agreed to deploy joint units to the centre of town to act as a buffer between the two sides.

"The orders have been given for the JIUs (joint integrated units) to go into the middle of town," he said. But as the high-level meeting between the former north-south foes ended, heavy shelling could be heard.

Tensions have been high for months between South Sudan and Khartoum over delays in implementing the 2005 peace deal. Each side accuses the other of stalling.

The SPLM says more than $1 billion in oil revenues from Abyei has been taken by the ruling National Congress Party rather than shared with the south as the peace deal prescribes.

But despite the clashes in Abyei, north-south relations have improved markedly since an unprecedented attack by Darfur rebels on Khartoum at the weekend, when South Sudan offered military help to the government.

The 2005 peace deal did not cover Sudan's western Darfur region, where war broke out in 2003.

Sudan has suffered decades of conflict between Khartoum and far-flung regions that complain of neglect and discrimination by the traditionally Arab-dominated central government.

Clashes along the north-south border have continued despite the 2005 accord and have killed hundreds of people in the past year. A lack of discipline among ex-rebels and pro-Khartoum militias means fighting can easily flare up.

Some 2 million people died in the war between mainly Muslim north Sudan and the largely Christian and animist south.

International experts believe 200,000 have died as a result of the war in Darfur, where Muslim but non-Arab Darfuris took up arms in 2003. The government says only 10,000 people have died.

The Darfuri Justice and Equality Movement brought the regional conflicts to the capital for the first time on Saturday in an attack which killed more than 200 people. Sudan blamed Chad for the assault and cut diplomatic relations.

The Greater Nile Petroleum Operation Company (GNPOC), a consortium led by China's CNPC, India's ONGC and Malaysia's Petronas, operates in Abyei. Experts say oil production has declined in the past few years.