|Fighting forced thousands of Abyei inhabitants out of the remote territory last month [AFP]|
The agreement sets out a "mechanism" for ways for both sides to resolve their long-standing disagreements over the exact borders of the lucrative region, its local government and the sharing of oil revenues.
Omar al-Bashir and Salva Kiir, respectively Sudan's president and vice-president, signed the agreement on Sunday.
Tens of thousands of local residents fled fighting between northern and southern troops in the remote central territory last month, raising fears that Africa's biggest country could be heading back into civil war.
Abyei has been a main point of contention for Khartoum and the SPLM (Sudan People's Liberation Movement) since the former foes signed a 2005 peace deal that ended two decades of civil war fought along ethnic, religious and ideological lines and complicated by oil.
The region, which has lucrative oil fields and a key oil pipeline, will choose to join the north or south in 2011, when the entire south will vote on secession.
Source: Al Jazeera and agencies