Mediators have urged both sides to compromise as peace talks between the government and rebels began again in the Kenyan capital, Nairobi.

The talks seeking to end the 20-year civil war are due to tackle the the division of oil wealth and political power between the south and the Muslim north.

The two sides have agreed to observe a ceasefire for the duration of the talks, but both have accused each other of launching attacks in the oil-producing south.

"Let us keep in our minds, that the welfare of an entire nation and its people must not be sacrificed at the altar of personal ambition," chief mediator Lazarus Sumbeiywo told the opening session of the talks.

The BBC's reporter in Nairobi says many observers believe that the war in Sudan is being increasingly fuelled by the desire to control the wealth from oil.

This, the third round of talks, was delayed by a week because of a dispute over the agenda.

A row broke out on the eve of talks, with Sudan's Government angrily dismissing rebel demands that Islamic or Sharia law should not be enforced in the capital, Khartoum.

The Christian and animist SPLA says Khartoum should have a special status if all Sudanese are to feel at home there.

'Furious'

Sudanese Vice-President Ali Uthman Muhammad Taha told state radio that the government was committed to Sharia law in northern Sudan and that the south would have special status.

He added that the application of Sharia law in Khartoum was not up for discussion.

The SPLA has said that it wants Khartoum Sharia-free, or the capital of the country moved to the south.

The BBC's Alfred Taban in Khartoum says the government is reported to be furious with that suggestion.

Both sides have said they will continue discussing issues such as power-sharing.

Our correspondent says the government agrees the south has not had a fair deal, but that the SPLA, which wants at least 40% of top government positions, is asking too much.

Renewed fighting

The sharing of the south's huge oil resources is also likely to prove problematic.

The SPLA is demanding 80% of oil revenues, whereas the government is only prepared to concede 10%.

The two sides reached an outline agreement on power-sharing in the Kenyan town of Machakos last July, but the details still have to be worked out.

President al-Bashir is trying to woo southerners

The latest talks coincides with fresh reports of fighting between the two sides.

State radio reported on Tuesday that the Sudanese army had repulsed an attack by rebels on one of its positions in the south, but rebels denied the charge, saying the government was on the offensive.

About two million people have been killed in the civil war.

A referendum on self-determination is to be held in the south in 2008.