Al Jazeera's Jamea Nour, reporting from Asmara, said: "Building trust between Sudan and Chad and bringing back the relations between the two countries to how they were before, even if gradually, were the two main topics tackled during the Asmara-based fifth meeting of foreign ministers."
"Following intensive talks, Khartoum and N'Djamena have agreed to exchange ambassadors before the sixth meeting of the group is held."
Both parties also agreed to deploy African military monitors from the group's seven countries on the borders between the two countries, with an annual budget that might reach up to $30 million.
The foreign ministers mediating the conflict come from Eritrea, Senegal, Libya, Gabon and the Congo.
Despite a tone of optimism at the summit, the Eritrean president called on Friday for a more comprehensive political solution for the crisis.
"It is important to realise that looking for a settlement through the prospect of internalisation may complicate the situation," Isaias Afworki said. "Settlement efforts must be focused within a narrow local framework."
Sudan's delegation to the meeting was upbeat about the talks, pinning blame for the two country's problems on Darfuri fighters.
Deng Alor, the Sudanese foreign minister, said: "Chad and Sudan have had close and excellent relations as neighbours. The issue of Darfur has negatively affected this relationship. I believe that it is possible to improve the relation with Chad."
Moussa Faki Mahamat, Chad's foreign minister, however, proved less optimistic.
Mahamat accused Sudan of "still recruiting and arming mercenaries and rebels" near the border with Chad, for the purpose of overthrowing the government in N'Djamena.
"This, unfortunately, totally contradicts what we have agreed on," he said.