After days of tough negotiations in neighbouring Kenya, the two sides clinched a deal on Wednesday about the position and strength of their respective armed forces, brightening prospects of a comprehensive peace accord to end 20 years of devastating civil war.
"We have come to an agreement regarding the deployment of forces and the size of the forces," government spokesman Said al-Khatib said.
"We expect that the agreement on this framework will make the remaining issues of the talks easier," he added.
"There has been a breakthrough on one of the outstanding issues –that is security and military arrangements," Samson Kwaje, the spokesman for the rebel-Sudan Peoples' Liberation Army (SPLA) said.
"We have agreed on substantial withdrawal of the government forces from the south, redeployment of SPLA forces in Khartoum and the formation of equal units of an integrated force in Southern Blue Nile and Nuba Mountains," Kwaje added.
"We have come to an agreement regarding the deployment of forces and the size of the forces"
The deal over the respective armies removes a major hurdle in reaching an accord, that ultimately would pave the way for a six-year autonomous rule in southern Sudan.
"The agreement has been satisfying to the SPLA. The talks will now get momentum. We hope to tackle the remaining issue," the rebel spokesman said.
The agreement followed face-to-face negotiations between Sudanese Vice-President Ali Usman Muhammad Taha and the SPLA leader John Garang.
Aljazeera's correspondent meanwhile reported that the Sudanese vice-president had decided to extend his stay in the Kenyan resort of Nijafa to try and sort out the remaining outstanding issues.
The government in Khartoum and the rebels in the south have been fighting a war since 1983. The talks are aimed at ending the long civil war, which has claimed thousands of lives.