The foreign ministers of Thailand and Cambodia say they have made progress in resolving a festering border dispute, and have agreed on steps to begin demarcating disputed territory that sparked a deadly military clash last month.

Following talks in the Cambodian capital, Phnom Penh, the two sides said they had also tentatively agreed to redeploy their troops and clear land mines in the area near the ancient Preah Vihear temple.

"We have made a big practical step forward," Hor Namhong, Cambodia's foreign minister, said at a press conference after the meeting.

It is not yet clear, however, when the redeployment would begin, because the Thai side will first have to submit to parliament documents it negotiated with Cambodia.

"We have achieved 99 per cent, but there still remain a few points on which I need to seek approval from the Thai parliament first," Sompong Amornvivat, Thailand's foreign minister, told reporters.

In October three soldiers were killed and 10 wounded in a brief but intense exchange of gunfire between Thai and Cambodian troops.

The clash had raised fears of a war between the neighbours who have argued over the disputed stretch of jungle for decades.

In 1962 the World Court awarded ownership of the 14 century Preah Vihear temple to Cambodia, but sovereignty over the surrounding land has never been clearly resolved.