"The two sides have reached a breakthrough after four days of strenuous talks, ending more than 10 years of estrangement that were not in the interest of the two neighbours and their brotherly peoples," said Sudanese foreign ministry spokesperson Jamal Mohammed Ibrahim.
He was speaking at the close of a fence-mending visit to Khartoum by an Eritrean delegation, which was headed by presidential adviser Abdallah Mahmud Jaber.
Sudan, which is already plagued with a bloody civil war in the western region of Darfur and residual instability in the pacified south, has this year witnessed several fresh incidents on the eastern front, near its border with Eritrea.
The tribal rebellion in the eastern states has been actively supported by Asmara, which has for years welcomed miscellaneous Sudanese opposition groups onto its soil while accusing Khartoum of doing the same.
Ibrahim said that both countries had agreed to upgrade their bilateral ties and that Asmara expressed support for the north-south peace agreement reached between Khartoum and the Sudan People's Liberation Movement (SPLM) in January.
The two sides "agreed to take the practical arrangements necessary for establishing an atmosphere conducive to building bridges of trust", said a joint statement issued after the talks.
The statement also said joint committees would be set up "to discuss means of removing obstacles to the normalisation of the ties and seek ways to establish and strengthen bilateral cooperation in all spheres".
The visit to Sudan by the Eritrean officials was the first by such a high-ranking delegation in several years.
Former Sudanese foreign minister Mustafa Osman Ismail was known for his virulent attacks against the Eritrean regime and the fence-mending talks came less than a month after a national unity government was formed in Sudan.
The new foreign minister, Lam Akol, is from the SPLM, which used to have ties with Eritrea.
The warming ties between the two neighbours also comes as other Sudanese opposition traditionally supported by Asmara are engaged in reconciliation talks.
The joint statement also said that a high-ranking Sudanese delegation would soon travel to Asmara for talks. - Sapa-AFP