Tens of thousands are estimated to have died in clashes with rebels close to the 400 km (250 mile) long Sudan-Uganda border.

Uganda's President Yoweri Museveni and Sudan's President Omar al-Bashir signed the landmark agreement after talks in the Kenyan capital, Nairobi.

These steps are the foundation toward future peace

Jimmy Carter

Kenyan President Daniel arap Moi and the former US president, Jimmy Carter, who had been asked to mediate, were also present at the talks.

They pledged to renounce the use of force to resolve their differences, to disband and disarm terrorist groups, to cease support for any rebel groups in each other's countries and to respect sovereignty and territorial integrity, according to the Carter group who organised the talks.

The 75-year-old Mr Carter described the move as "a wonderful step forward toward peace and reconciliation that will lead toward full diplomatic relations between Uganda and Sudan".

Uganda broke off diplomatic relations with Sudan in 1994, accusing it of helping rebels of the Lord's Resistance Army in northern Uganda.

Sudan, for its part, accuses Uganda of supporting the rebel Sudan People's Liberation Army, which is fighting in southern Sudan.

Museveni: Troops stretched by fighting in DR Congo

Analysts believe Khartoum also backs the rebel Allied Democratic Forces (ADF), which has caused havoc in Uganda's south-west, near the border with Congo.

In recent months, Khartoum has made a number of conciliatory gestures aimed at ending its 16-year civil war, which is one of the longest conflicts in Africa.

On Tuesday, Ugandan MPs approved an amnesty for all anti-government rebels.

Under the measure, rebels will be given six months to surrender themselves to Ugandan authorities and to renounce the use of force to overthrow the government.