The agreement, signed on Wednesday by Omar al-Beshir, the Sudanese president, and his Chadian counterpart Idriss Deby, provides for the re-establishment of relations and the opening of consulates.
It calls for a ban on the use of the territory of either for hostile activity directed against the other and on accepting dissidents from the other.
It also envisages "the creation of a peace force" between the two countries and the establishment of "an African ministerial committee presided over by
The two presidents welcomed the deal and undertook to respect it.
Libyan plea
Earlier on Wednesday, al-Qadhafi told his counterparts that it was vital they reach agreement among themselves if the continent is to be spared from outside intervention.
He called on Deby and al-Beshir to continue their discussions with their African counterparts until they agreed on a solution to the underlying source of the tension - the three-year-old civil war in
The presidents of
Al-Qadhafi said: "What's going on in Darfur is the cause of the tension in relations between
"We must resolve this problem, we must not leave this summit until we have found a solution to this problem."
African solution
The Libyan leader said it was vital that the region's leaders agree on an "African solution" to the problem in order to "avoid foreign interference and keep the door firmly shut to outside machinations".
"We have no need of UN peacekeepers - we have our own African forces - and we certainly have no need of the forces of our friend (British Prime Minister Tony) Blair. We can settle our problems ourselves."
The UN Security Council last week approved contingency planning for UN peacekeepers to take over from an African Union force in
But despite strong pressure from Western governments, including
The
War of words
Al-Qadhafi said the two neighbours had "crossed a red line" with their war of words and called for their desert border to be sealed to prevent fighters' infiltration in either direction.
"
Human Rights Watch on Sunday called for the deployment of an international force to protect Chadian villagers from what it described as almost daily cross-border raids by militias based in
The New York-based group accused both Sudanese and Chadian militiamen based in
Up to 300,000 people have died in the conflict and more than two million been displaced.
Fundraising
The UN meanwhile has announced that donor governments would meet in
Radhia Achouri, a UN mission spokesperson, said: "A pledging conference will be held in
She said the conference was originally scheduled for 20 February but was postponed without an exact date set.
The AU has said it has no funds to operate beyond March and is considering a handover of its
Achouri said the security situation in
On 2 February, armed tribesmen attacked three villages under dissident control in
PHOTO CAPTION
The body of a rebel fighter lies on the ground following an attack by Chadian rebels and army deserters in the town of