Both sides have accused each other of sponsoring rebel attacks [EPA]

The announcement came during a meeting held by foreign ministers of the Contact Group on the Sudan-Chad crisis in Eritrea's capital, Asmara.

The neighbouring countries have had rocky relations since May, when Darfur-based rebels launched an attack near Khartoum - the closet they have yet come to hitting the seat of Sudan's government.

Sudan accused neighbouring Chad of supporting the fighters and cut ties immediately. Chad, in turn, closed its border with Sudan and halted bilateral trade.

Both parties also agreed to deploy African military monitors from the group's seven countries on the borders between the two countries, with an annual budget that might reach up to $30 million.

The foreign ministers mediating the conflict come from Eritrea, Senegal, Libya, Gabon and the Congo.

Optimistic talks

Despite a tone of optimism at the summit, the Eritrean president called on Friday for a more comprehensive political solution for the crisis.

"It is important to realise that looking for a settlement through the prospect of internalisation may complicate the situation," Isaias Afworki said. "Settlement efforts must be focused within a narrow local framework."

Sudan's delegation to the meeting was upbeat about the talks, pinning blame for the two country's problems on Darfuri fighters.

Deng Alor, the Sudanese foreign minister, said: "Chad and Sudan have had close and excellent relations as neighbours. The issue of Darfur has negatively affected this relationship. I believe that it is possible to improve the relation with Chad."

Moussa Faki Mahamat, Chad's foreign minister, however, proved less optimistic.

Mahamat accused Sudan of "still recruiting and arming mercenaries and rebels" near the border with Chad, for the purpose of overthrowing the government in N'Djamena.

"This, unfortunately, totally contradicts what we have agreed on," he said.

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