North and south Sudan have agreed "in principle" to demilitarise the disputed central region of Abyei and to allow an Ethiopian peacekeeping team to come in, an official say.
Details of the agreement are yet to be worked out.
The agreement was reached after two days of talks between Omar al-Bashir and Salva Kiir, the respective leaders of Sudan's north and south, according to Barney Afako, a spokesman for the former South African president, Thabo Mbeki, who is helping lead the negotiations.
"The parties have agreed to the idea that the Abyei area should be demilitarised and they agreed in principal that the southern and the northern forces are to pull out of the area," Afako said on Monday.
The political status of Abyei and issues such as oil revenues are yet to be discussed, Afako said.
To assist with the demilitarisation, the Ethiopian government offered to send in troops to oversee security so that civilians who fled can return, he said.
Engaged in negotiations
Afako emphasised that the two parties are still engaged in negotiations and that many details remain to be agreed on.
Commenting on the development, Rabie Abdul Atti, a member of Sudan's ruling National Congress Party, told Al Jazeera: "The agreement will happen before July 9, in the condition that SPLM will not have any existence in Abyei, the new forces should be under the UN.
"This will pave the way for the presidency to perform its function in Abyei and for the referendum or any other political solutions with SPLM."
Earlier on Monday Hillary Clinton, the US secretary of state, said the US wants to see northern troops withdraw from Abyei and would welcome Ethiopian peacekeepers being sent in.
"We would welcome both parties agreeing to ask Ethiopia, which has volunteered to send peacekeepers and to do so as part of a United Nations mission that will be strengthened," she said in Tanzania.
"The United States has made our view very clearly known to both President Bashir and Vice-President Kiir and I am looking forward to hearing positive news out of their ongoing discussions."
Tensions between Khartoum and Southern Sudan flared after northern forces occupied the fertile Abyei region on May 21.
Khartoum has refused calls from the US, the UN and southern officials to withdraw.
South Sudan is due to secede on July 9, but the split with north Sudan has been complicated by unresolved questions such as how to share oil revenues and the exact position of the common border.
Fighting has also continued for nearly a week between the northern army and south-aligned armed groups in the northern oil state of Southern Kordofan, which borders the south.
Southerners voted to secede in a January referendum, the culmination of a 2005 peace deal that ended decades of north-south civil war.