Officials said the proposal came from the Sudan Peoples' Army (SPLA), which if accepted, would result in the creation of an integrated force of 3000 troops from both sides.
"The south is insisting on the formation of an integrated force, as a nucleus for a national army, should a peace deal be reached and Sudan remained united, an official attending the talks said.
The talks underway in Kenya is aimed at finalizing a peace deal that tentatively agrees to grant southern Sudan autonomy during a transitional period of six years.
"The south is insisting on the formation of an integrated force, as a nucleus for a national army"
If successful, the talks would end a long running conflict between the north and south that has left an estimated 1.5 million people dead.
The SPLA has also proposed that Khartoum keep its current army in the north, while those of the SPLA will remain in the south during the transitional period.
"Only the retrained integrated force will be allowed to operate both in the north and south," the official explained.
Officials said that Khartoum was mulling over the proposal and is yet to make up its mind.
Differences over security issues have primarily bogged down the talks between Sudanese Vice-President Ali Osman Taha and SPLA chief John Garang, that entered its 11th day.