Sudan's army accused South Sudan of backing a rebel attack on the strategic town of Talodi on Friday, the eve of planned crisis talks between the two nations after earlier clashes caused global alarm.

"They came supported by tanks and cannons from South Sudan," army spokesman Sawarmi Khaled Saad said in a statement issued by the official SUNA news agency.

Rebels said a battle was raging for the town in South Kordofan state, close to the disputed border with South Sudan, but they denied receiving Southern support and said the army's claim gave Sudan an excuse for not going ahead with the talks expected to begin Saturday in Addis Ababa, Ethiopia.

"The fighting is continuing inside Talodi," Arnu Ngutulu Lodi, of the Sudan People's Liberation Movement-North (SPLM-N), told AFP. "It's an intense battle now."

Earlier Friday Saad had said the military blocked and defeated rebels who were hoping to capture Talodi, after the insurgents reported seizing two Sudanese army outposts several kilometres from the town.

The army spokesman said the Southern-backed rebel bombardment of Talodi began at 7:00 am Friday (0400 GMT), killing women and children.

"SAF (Sudanese Armed Forces) troops reacted to this and the battle continued until 6:00 pm," he said. "We succeeded in defeating the rebels, with heavy losses among them."

He said the rebels "ran away" but were building up forces elsewhere because their leaders "and South Sudan want to continue their attack on Talodi."

Lodi, of the SPLM-N, said Sudanese troops were backed by air support.

"We are using normal artillery that we seized from them, mortars, and tanks also," he said, calling the allegations of Southern support "false."

"Time will show who won the battle in Talodi," he said, adding that the rebels had not yet taken the town.

"Of course, there will be casualties," he said, but figures were not yet available.

Talodi, South Kordofan's third-largest town, is about 50 kilometres (30 miles) from the disputed border with South Sudan.

It is near the intersection of a road from the state capital Kadugli and another leading to South Sudan.

Ethnic minority insurgents from the SPLM-N -- who have been battling Khartoum since June -- fought alongside the former rebels now ruling South Sudan, which became independent in July last year after an overwhelming vote for secession following Africa's longest war.

Border tensions have mounted since then and Sudan has previously accused the South of supporting the SPLM-N, a charge denied by the government in Juba.

More than 100 kilometres south-west of Talodi, border clashes occurred in the Heglig oil centre region between troops of the north and South on Monday and Tuesday in the most serious violence between them since South Sudan's independence.

Weekend crisis talks led by the African Union were expected between senior envoys of both nations in Addis Ababa, after the Heglig fighting sparked fears of a wider war.

Saad, the army spokesman, alleged South Sudan and rebels of the Darfur-based Justice and Equality Movement (JEM) were building up forces south of Heglig in preparation for another attack.

JEM rebels denied any involvement in the previous Heglig fighting.

Analysts said there are elements in Khartoum, as well as the South, opposed to recent moves towards warmer relations between the two countries and suggested the flare-up over Heglig was an effort to sabotage a rapprochement.

The two sides have also been unable to resolve a dispute over oil fees which led the South in January to shut crude production after Khartoum began seizing Southern oil in lieu of compensation.

But as part of a move towards improved ties a South Sudanese delegation visited Khartoum on March 22 to invite Sudanese President Omar al-Bashir to an April 3 summit with his counterpart Salva Kiir.

Ahead of that visit the chief of Sudan's powerful intelligence service alleged a South Sudanese-backed rebel attack on Heglig, a claim dismissed as propaganda by the rebels.

When clashes in the Heglig area began a few days later, Sudan suspended the planned April 3 summit.

South African President Jacob Zuma on Friday urged Sudan and South Sudan to ease fears of an all-out war and resume their scheduled leaders' meeting.