Sudan has told Chad it reserves the right to respond militarily to any aggression on its territory but said it will seek diplomatic ways to ease the tension, the foreign ministry spokesman said today.
The Sudanese government has accused the Chadian army of launching an attack on Monday that killed 17 of its soldiers.
Chad denied any deliberate assault on its eastern neighbour, but it said its forces had clashed with Sudanese troops after crossing the border to pursue Sudanese-backed rebels it accused of launching raids.
"We have informed Chad that it is best to seek a peaceful solution to any problems but every country has a right to respond to an attack," said spokesman Ali al-Sadig.
"We have not decided how we will respond but our steps will be made clear soon. We recommend a peaceful settlement."
The incident increased tension between the two oil-producing central African neighbours, whose ties have been marred by violence spilling over from conflict in Sudan's Darfur region.
Sadig said Sudan's message was delivered to the Chadian ambassador on Tuesday and that Chad had summoned the Sudanese ambassador over the incident.
Chad's government warned Sudan against taking military action, saying it would use all means to respond.
As the two sides traded accusations, the United Nations said up to 400 people had been killed in Chad in cross-border attacks by Sudanese Janjaweed militia 10 days ago and one UN official who visited the remote area described scenes as "apocalyptic".