Sudan and South Sudan have no choice but to work together in order to avoid "suicide", former prime minister Sadiq al-Mahdi said on Tuesday.

"It is a win-win formula or a lose-lose formula," Mahdi, who leads a major opposition party, Umma, told a gathering organised by the South Sudanese embassy.

Sudan and South Sudan fought along their undemarcated frontier in March and April, sparking fears of wider war and leading to a UN Security Council resolution which ordered a ceasefire and the settlement of critical unresolved issues.

The two sides have no choice but to cooperate, Mahdi said, because "what is happening now is suicide".

After weeks of fragile talks in the Ethiopian capital, Sudan and South Sudan on August 4 reached a breakthrough agreement over fees due by Juba for shipping its oil through the north's pipeline for export.

In January the South shut its oil production -- the impoverished nation's prime revenue source -- after accusing the north of theft.

But Khartoum says the oil deal will not be implemented unless security issues are settled first.

Talks led by the African Union are due to resume in late August after the Muslim Eid holiday.

Sudan accuses South Sudan of supporting insurgents on its territory, a charge analysts believe despite denials by the government in Juba, which in turn accuses Khartoum of backing rebels south of the frontier.

The oil deal came just after a UN-imposed August 2 deadline for the two sides to resolve that and other critical issues. Border disputes, the contested Abyei region, and the status of each country's nationals in the other remain to be settled.

Mahdi said the two countries must find a formula that recognises their mutual sovereignty while acknowledging their complementarity on a continent moving towards greater unity.

"There is no way we can keep borders as hard borders," said Mahdi, a democratically-elected leader who was overthrown in 1989 by President Omar al-Bashir.

South Sudan separated in July last year after a 2005 peace deal paved the way for independence following a 22-year civil war which killed two million people.