South Sudan has denounced as an act of war the takeover by north Sudan forces of the contested border town of Abyei.
A southern military spokesman told the BBC the North had attacked the area with 5,000 troops, killing civilians and southern soldiers.
South Sudan is due to become independent in July, but Abyei's status remains to be determined after a referendum on its future was shelved.
The UN has called for an end to fighting between the two sides.
Some 20,000 people, almost the whole population of the town, have fled, aid agency Medecins Sans Frontieres (MSF) has told the BBC.
Spokesman Raphael Gorgeu said residents had moved to Agok, about 45km (28 miles) south of Abyei, and were fleeing further south.
He said 42 people wounded in the fighting in Abyei had been treated at a local MSF hospital.
The seizure of Abyei followed two days of skirmishes, artillery fire and at least one air raid.
A UN Security Council mission is in the capital, Khartoum, and was due to visit Abyei on Monday, but this has now been cancelled.
The BBC's James Copnall in Khartoum says that in a clear demonstration of who is now in charge of Abyei, President Omar al-Bashir issued a decree dismissing the region's administration.
Abyei had been governed by a joint body comprising northerners and southerners, led by a southerner.
The security council will undoubtedly raise this, and the surprise northern military action, in its meetings on Sunday with senior northern officials, including the Vice-President Ali Osman Taha, our correspondent says.
Southern military spokesman Col Philip Aguer said the North had committed an aggression, and called for the international community to step in.
"If the international community do not intervene quickly to rescue the situation then this is a complete violation of the comprehensive peace agreement, a complete violation of the ceasefire, and it is a declaration of war by Khartoum," he told the BBC.
Southern 'ambush' criticised
The north says it acted after 22 of their men were killed in a southern ambush on Thursday.
The UN said the northern troops who were ambushed were being escorted out of Abyei by UN peacekeepers.
UN officials described the incident as "a criminal attack" and the US called on South Sudan to "account" for the assault.
Washington said the attack was "in direct violation" of the agreement signed by the north and south in January to "remove all unauthorised forces" from Abyei.
South Sudanese forces denied responsibility for the incident.
Tension over Abyei - claimed by a southern group, the Dinka Ngok, and northern nomads, the Misseriya - has been rising since a referendum on its future scheduled for January was postponed.
Since then there have been fears clashes in Abyei could spark a new north-south war, which this latest incident will do nothing to dispel, our correspondent says.
Under a 2005 north-south peace deal, which ended 22 years of civil war, Abyei was granted special status and a joint north-south administration set up in 2008.