Sudan and breakaway South Sudan on Sunday agreed to cooperate in the transfer of more than 300,000 people to the South, the official SUNA news agency said.

Khartoum's Social Welfare Minister, Amira al-Fadel Mohamed, signed a memorandum of understanding on the issue with South Sudan's Minister of Humanitarian Affairs Joseph Lual Achwel, SUNA said.

The agreement covers road, air and river transport, it added.

Up to 700,000 ethnic southerners are estimated to still be in Sudan ahead of an April deadline for them either to go to the South or normalise their status with the Khartoum authorities.

The UN's High Commissioner for Refugees, Antonio Guterres, has said he believed most of the 700,000 wanted to go South.

More than 330,000 ethnic southerners have returned since October 2010 from the north, which fought a two-decade civil war with southerners until a 2005 peace deal led to South Sudan's independence last July.

Many of those still in the north have been stuck for months in unsanitary and crowded camps.

Even those who reach the South often end up in similar facilities as they await more permanent resettlement.

Tensions between Sudan and South Sudan could escalate if outstanding issues are not resolved, UN Secretary General Ban Ki-moon has warned.

The two nations are holding African Union-mediated talks in the Ethiopian capital Addis Ababa this week over disputed oil fees.

South Sudan has shut down oil production after accusing Sudan, on whose pipeline and refinery it depends to export oil, of stealing its crude.

On Friday the two sides signed a "non-aggression" treaty committing them to respect each other's territorial integrity.