Both Sudan and South Sudan claim Abyei, a border region containing fertile grazing land, which Khartoum took in May last year - triggering the exodus of tens of thousands of civilians - after a southern attack on an army convoy.
Recent border clashes between Sudan and South Sudan, which culminated with South Sudan seizing a disputed oil field, prompted the Security Council to pass a resolution last week threatening sanctions if the two sides did not follow an African Union roadmap stipulating a cease-fire and a return to talks.
"The U.N. Interim Security Force for Abyei reports that yesterday South Sudan's inspector general officially ordered the withdrawal of the South Sudan police service from the Abyei area," U.N. Secretary-General Ban Ki-moon's spokesman Martin Nesirky told reporters.
"Following the announcement, some 700 South Sudan police, with the U.N. mission's logistical support, relocated to South Sudan," he said. "The U.N. mission is in the process of verifying that all South Sudan police elements have withdrawn from the Abyei area."
The withdrawal comes almost two weeks after South Sudan told the United Nations it planned to pull its police out of Abyei, where the world body has 3,800 peacekeepers. Nesirky said South Sudanese police officers had been ordered not to visit family in the Abyei area in uniform and with guns.
The United Nations said in March that Sudan has 400-500 troops in Abyei and South Sudan has about 300 soldiers based less than two miles south of its border with Abyei.
South Sudan seceded from Sudan in July, six months after a referendum agreed under a 2005 peace deal that ended decades of civil war that killed more than 2 million people. Such a vote was also planned in Abyei but never held because both sides cannot agree on who can participate.
A senior Western diplomat said on Wednesday that it was often difficult to verify allegations South Sudan and Sudan are making against each other. But he said that if the two sides fail to withdraw from the disputed border area of Abyei by May 16 as demanded by the council, talk of sanctions would begin.
The United States welcomed the withdrawal of the South Sudanese police and urged Sudan to pull its troops out of Abyei and end aerial bombardments of South Sudan. Khartoum has denied launching airstrikes on its neighbor.
"We urge all parties to abide by their agreement to a cessation of hostilities and the resumption of negotiations on outstanding security and political issues," U.S. Ambassador to the United Nations Susan Rice said in a statement.
The Security Council is due to vote on the renewal of the mandate for the U.N. peacekeeping force i n Abyei on May 16. In a May 2 resolution, the Security Council gave the two sides a 48-hour ultimatum to halt violence and three months to resolve all disputes under threat of sanctions.
Distrust runs deep between the neighbors, who are at loggerheads over the position of their shared border and how much the landlocked south should pay to transport its oil through Sudan.
Analysts have long said tensions between the countries could erupt into a full-blown war and disrupt the surrounding region, which includes some of Africa's most promising economies.