The Western Sahara's Polisario Front group said on Friday that Morocco had broken their ceasefire and "ignited war", but Rabat denied there had been any armed clashes and said the three-decade truce remained in place.
Friday's flare-up poses the biggest risk in decades of a new phase of armed conflict in the remote desert region, adding to friction between Morocco and its biggest neighbour, Algeria, which backs the Polisario.
The Polisario representative in Europe, Oubi Bechraya, told Reuters there had been military confrontations with the exchange of fire on Friday, adding "we have declared a return to the armed struggle".
However, Moroccan Foreign Minister Nasser Bourita denied there were clashes, saying the army had only fired warning shots.
"Morocco is committed to the ceasefire," he told Reuters.
A diplomat familiar with the situation said heavy weapons fire was audible for about half an hour from the direction of a Moroccan military concentration near the site of Friday's escalation.
Tensions between Morocco and the Algeria-backed independence movement have been growing in recent weeks, with pro-Polisario protesters, helped by armed fighters, blocking the main road linking the territory to neighbouring Mauritania.
Morocco said early on Friday it was starting an operation to clear the road in the Guerguerat area, located in a U.N.-monitored buffer zone where any armed activity breaches the 1991 ceasefire.
"Morocco decided to act after giving enough time for the U.N. to intervene," Bourita said, adding that Morocco would build a new sand barrier to stop the Polisario from accessing Guerguerat in future.
A spokesman for U.N. Secretary General Antonio Guterres said he was committed to doing the utmost to avoid the collapse of the ceasefire and to removing obstacles to restart the political process.
The Polisario seeks Western Sahara's independence from Morocco, which has held the vast desert region since Spain quit in 1975 and regards it as an integral part of its own land.
Blessed with phosphate deposits and rich fishing waters, Western Sahara also provides the only Moroccan land route to the rest of Africa except through Algeria, whose borders with Morocco have been closed for decades.
A Moroccan news site, le360, said the army had used anti-tank weaponry to respond to a Polisario attack. Bourita said the army would only use arms in self-defence.
The Polisario said in a statement that the Moroccan army had crossed the sand barrier between the forces in several places early on Friday.
Last month the U.N. Security Council passed resolution 2548 which called for a "realistic, practicable and enduring solution ... based on compromise".
That language was widely seen as calling into doubt any referendum on the territory's future - a goal long sought by the Polisario and backed by the United Nations in the 1991 ceasefire.
Algeria in a statement said it "deeply deplores" what it called Morocco's violation of the ceasefire and urged the United Nations to appoint a new Western Sahara envoy and restart talks.