Deadly fighting raged between Sudanese forces on Tuesday in Abyei, a flashpoint oil district between north and south where the UN warned that violence threatened to undermine the fragile peace process.

Three years after the end of Sudan's north-south civil war, aid workers said government troops and southern ex-rebels, the adversaries who reached a fragile power-sharing peace agreement in 2005, fought for hours in the town of Abyei.

The clashes, involving guns, mortar rounds and artillery, reached outside the gate of the main UN compound on the edge of town and severed a tentative ceasefire brokered by the United Nations late last week, aid workers said.

The UN said that unchecked deterioration in Abyei -- whose estimated half a billion dollar oil wealth is bitterly contested by Sudan's Arab north and Christian and animist south -- could undermine the entire peace process.

The US embassy called for a halt to the "dangerous escalation of violence." The UN said it was in contact with both parties and warned that insecurity threatened efforts to help up to 50,000 people displaced from Abyei last week.

"It started at 4:00 am (0100 GMT) and stopped around 8:00 am. It started again just before 10:00 am and lasted about an hour. The fighting has been very heavy," said one aid worker on condition of anonymity.

"It's currently quiet but I think the general feeling is that this is not the end," the aid worker added.

Aid workers said the violence began when southern Sudan People's Liberation Army (SPLA) attacked impoverished Abyei, which lies at the heart of the contested district and which had been under government military control.

The Sudanese army said its soldiers were killed and wounded in the assault but that it repulsed the attack.

Fears are rising of a possible counter-attack on Agok, 25 kilometres (15 miles) to the south where UN agencies and aid workers are distributing food to some of the 30,000 to 50,000 people displaced by fighting in Abyei last week.

The special UN representative in Sudan, Ashraf Qazi, expressed grave concern and said there had been numerous casualties. Aid workers reported Antonov planes bombing a site four kilometres (two miles) from an assistance hub.

"UNMIS (the UN mission in Sudan) has been in contact with both parties in an effort to arrest further deterioration of the situation, which if not checked could undermine the entire peace process," Qazi said in a statement.

Brigadier General Muntasir Sabier, the army commander in Abyei, told AFP by telephone that SPLA forces attacked in a bid to seize control of the town.

"It was a very aggressive attack on us. They had six tanks and many machine guns on vehicles. They used all their weapons to occupy Abyei. But we defeated them. Our reserve came and chased them out of Abyei," he said.

"There are many, many officers and soldiers of them (SPLA) who were killed. We also have some casualties -- some dead and some injuries," he said.

Edward Lino, the chief southern politician based in Abyei, blamed the government military for sending additional troops into the town overnight.

"The objective of the SPLA now was first of all to defend ourselves and the area, and to defend the people," he told AFP by telephone from the south.

Lino said he had reports of "many wounded" and that fighting was "still going on".

"This is the biggest violation that happened (since the 2005 peace agreement) but we are for peace and we cannot allow it to fall," he added.

The United Nations last week evacuated its entire civilian staff from the town following days of fighting between government forces and the SPLA.

The entire civilian population in the town and outlying areas -- a mixture of Arab and Ngok Dinka tribesmen -- also fled.

Footage broadcast by the pan-Arab Al-Jazeera television network from Abyei after last week's fighting showed burnt-out buses, the smouldering wreckage of destroyed shops and homes, and cement buildings reduced to shells.

"The roots of this current violence are intimately tied to the inability of the parties, after almost three years, to implement the Abyei protocol," the US embassy warned referring to special plans to administer the border area.

Sudan's 2005 Comprehensive Peace Agreement, signed after 1.5 million people were killed in Africa's longest civil war, gave the south regional autonomy and participation in national government until a 2011 referendum on independence.

In 2011, Abyei will also hold a separate referendum on whether to retain its special administrative status in the north or join the south.