South Sudan freed Sudanese prisoners of war today in a gesture it hopes will defuse tension between Khartoum and Juba.

Their armies have been embroiled in escalating cross-border fighting that has threatened to tip into all-out war.

Sitting atop one of Africa's most significant oil reserves, Sudan and South Sudan have been unable to resolve a dispute over oil revenues and border demarcation since the South gained independence in July.

Nearly all oil production has now stopped and the border fighting in contested oil-producing regions has grown more intensive.

China, which has economic interests in both countries, and the African Union are pushing for a diplomatic deal.

''The SPLA (South Sudan's army) handed over prisoners of war to the ICRC. They were 14 who were captured during the battles of Heglig from April 10-15,'' Philip Aguer, spokesman for South Sudan's army, said in Juba.

Mr Aguer was referring to the Heglig oilfield, which the SPLA had captured earlier this month, but later withdrew from, under international pressure.

Juba has since accused Sudan's armed forces of bombing its territory, a claim Khartoum denies.

Mr Aguer said the Sudanese army was holding at least seven SPLA members as prisoner of war.

"We have requested that they be released if they have not been killed," he said. There was no immediate comment on the prisoners from Khartoum.

Clashes appear to have ebbed following weeks of cross-border fighting after Sudanese Foreign Minister Ali Ahmed Karti said Khartoum was ready to resume talks on security issues, a day after President Omar al-Bashir had ruled out negotiations.

The United States, China and Britain have all urged both sides to return to the negotiating table and end the fighting along the poorly marked 1,800km long border.

China, where South Sudan President Salva Kiir travelled for talks this week, said it would send its Africa envoy to Khartoum and Juba to help with talks.