Heavy fighting has broken out between government and rebel forces in a strategic Sudanese border town, a source familiar with the situation said on Tuesday, giving the first independent confirmation of the key battle.

The fight for El Kurmuk—which Sudan's army has denied—is the most serious in Sudan's Blue Nile state for more than a year.

"There has been heavy fighting since the start of this week," said the source, who cannot be identified.

Sudan's government severely restricts access to Blue Nile and South Kordofan, two states where the Sudan People's Liberation Movement-North (SPLM-N) have been fighting since 2011.

More than 200,000 people have fled as refugees to South Sudan and Ethiopia because of the war, the UN says.

An additional one million have been affected within Blue Nile and South Kordofan states, according to figures from the humanitarian wing of the rebels, along with data from the government's aid agency.

Kurmuk is an important trading centre on the Ethiopian frontier.

Khartoum accuses its other neighbour, South Sudan, of backing the SPLM-N but the South denies involvement.