Dead bodies and destroyed tanks lay in Sudan's southern oil centre of Heglig on Wednesday after government forces and South Sudanese troops clashed along the border, sparking international alarm.

Smoke still rose from a damaged residence at the battle scene.

An AFP reporter observed the war debris while accompanying Sudan's Oil Minister Awad Ahmad al-Jaz who landed in the nearby town of Heglig at 9:15 am (0615 GMT) accompanied by Ahmad Harun, governor of surrounding South Kordofan state.

The correspondent saw three bodies and two tanks but the tanks carried no visible identifying markings.

Some of the dead bore the insignia of rebels from the Darfur-based Justice and Equality Movement (JEM).

Sudan's military has alleged JEM "exploited" the north-south clash to target Sudanese troops in the Heglig area before being repulsed.

JEM on Wednesday repeated its earlier denial of involvement in the battle.

The movement's spokesman, Gibril Adam Bilal, said the dead might be government troops dressed in rebel garb.

"We as JEM, we confirm we are not part of that battle in Heglig at all," which was entirely a clash between South Sudan and Sudanese troops, Bilal said by telephone.

Two destroyed Land Cruisers at the battle scene also carried JEM insignia.

Both north and south claim parts of Heglig, an oil-rich territory that witnessed heavy fighting during Sudan's devastating 22-year civil war.

Numerous oil wells surround the town.

"Heglig and all around it is completely secure," Heglig area commander Bashir Meki told the Khartoum delegation.

Heglig town is about 15 kilometres (nine miles) from the disputed frontier's closest point.

South Sudan said its forces had taken the area on Monday when they pushed back Khartoum's troops which had moved over the frontier into Unity state following air strikes.

A large contingent of Misseriya nomads from the paramilitary Popular Defence Force (PDF), a key battle force for the Sudanese military, patrolled the Heglig area with rifles and motorcycles, but without uniforms.

"Our border was won in 1956 and we will fight for this border even without the government's permission, to protect our land," said Ismail Hamdien, a Misseriya leader who travelled to the battle scene to assess the situation.

Sudan and South Sudan both said ground clashes had ended by Wednesday.

Oil operations in Heglig are run by the Greater Nile Petroleum Operating Company (GNPOC), a consortium led by China's state oil giant CNPC.

"There is serious concern among us," one Chinese oil worker said.

"How can we work in this situation? We want the government to protect us because we are working for the people of Sudan."

Although both countries claim parts of the Heglig area, an analyst said it "is firmly in north Sudan".

Analysts said there are elements in Khartoum, as well as the South, opposed to recent moves towards warmer bilateral relations between the two countries and suggested the latest flare-up is an effort to sabotage a rapprochement.

Border tensions have mounted since South Sudan split from Sudan in July last year after an overwhelming vote for secession that followed Africa's longest war.

Earlier in March, after months of failed negotiations, an escalating row over oil fees and mutual accusations of backing rebels on each other's territory, South Sudan's chief negotiator Pagan Amum said relations had improved.

Amum and a South Sudanese delegation visited Khartoum last week to invite their "brother" Bashir to an April 3 summit in the southern capital Juba, and said he had accepted.

But after Monday's fighting Khartoum said it had suspended the meeting.

Al-Jaz was to return on Wednesday evening to Khartoum.

Sudan's defence and interior ministers were to address a parliamentary committee on Wednesday discussing the recent incidents, official media reported.