Sudan has withdrawn from African Union-mediated talks with South Sudan, according to state radio, amid continuing border clashes between the neighbours.
Khartoum said on Wednesday it had recalled its negotiating team from Addis Ababa, Ethiopia's capital, where the talks were taking place, and said it would use "all means" against its newly-independent southern neighbour, following two days of clashes along the border.
The declaration comes after the South Sudanese army said the town of Teshwin had come under attack by Khartoum's forces on Monday.
In response, South Sudan's parliament speaker urged legislators to mobilise the people and defend the nation in case an all-out-war broke out between the two nations.
"Khartoum might be meaning a real war ... If you don't defend yourself you will be finished, so you should go and mobilise the people on [the] ground to be ready," James Wani Igga, the speaker, told parliament.
"We have to be vigilant to all the points as they are attacking us in all corners," said Igga, a deputy chairman of the South's ruling party.
"In the meantime wherever you are you are to defend yourself," he added, to loud applause by politicians in the national assembly.
The Sudanese foreign ministry said that South Sudan has intruded deep into its territory in the worst violation of its sovereignty since its independence last July.
"I think this is the most serious after South Sudan's secession and it affects our main oil production area," Rahma Mohammed Osman told reporters on Wednesday
South Sudan's army spokesman said Sudan had attacked a disputed oil-producing border region with warplanes and artillery.
Philip Aguer said clashes erupted on Tuesday when troops from Sudan entered the Heglig region which they held for sometime before they were driven out.
"They launched a new attack, and occupied southern territory until the SPLA [Sudan People's Liberation Army] repulsed them," said Aguer. "Fighting continued today and is still ongoing."
He said the Sudanese ground forces had started their attack from the disputed area of Heglig, where Sudan controls an oil field that accounts for roughly half of its daily 115,000 barrel output.
Aguer told Al Jazeera that: "The SPLA have left Heglig, and Heglig is part of the territories of South Sudan, and it is a lie that it is part of Sudan."
In response to whether or not they were preparing for war, he said "We were never preparing for a war, in fact we are in self defense against the aggression from Khartoum."
Barbana Benjamin, South Sudan government spokesman, told Al Jazeera that four civilians, including a small child, were wounded in the fighting.
He said two brigades from the Sudanese army accompanied by "mujahedeen and other militias" took part in the attack.
Al Jazeera's Hytham Owait, reporting from South Sudan's capital Juba, said: "The SPLA offensive is expected to impact future relations between the two countries, along with the currently stalled negotiations."
The fighting is the the latest flare-up of violence that has delayed a summit between the former civil war foes.
The SPLA said the town of Teshwin in the border area had come under attack late on Monday and that fighting was continuing on Tuesday.
Al-Sawarmi Khalid Saad, Sudan's armed forces spokesman, could not immediately be reached for comment.
South Sudan, which seceded from Sudan in July, has been locked in a bitter dispute with Khartoum over oil payments and other issues, and clashes in the ill-defined border region last month raised concerns they might escalate into war.