"We don't know what to do now," said one young woman, sitting next to a pile of suitcases and plastic bags outside the heavily guarded front gate of the international terminal.

The unclear legal status for South Sudanese in the north is one of many unresolved issues between the former foes since the South gained independence in July under a peace agreement.

Khartoum has ruled out dual citizenship for more than 500,000 southerners who have lived in the north for decades and started treating of them as foreigners on Monday after the end of a grace period.

Until Sunday flights to the southern capital Juba had been conducted at the domestic terminal without passport controls.

But many are now stuck in limbo, since South Sudan has failed to open an embassy in Khartoum that can issue passports.

At the airport, hundreds of South Sudanese tried checking into their flights to Juba early on Monday but immigration officials denied them entry.

"They need passports to board flights," a Sudanese police officer said inside the terminal.

Both presidents were meant to sign agreements last week to allow citizens free residency but Sudan's President Omar Hassan al-Bashir called off a summit with his southern counterpart Salva Kiir after border fighting broke out.

With almost no passengers to check in, state-owned Sudan Airways and other local carriers suspended their Juba flights.

"We are ready to fly but wait for a political decision," said an official at Sudan Airways. The Sudanese foreign ministry could not be reached for comment.

Around 500 South Sudanese queued outside the embassy building but were unable to get passports or temporary travel documents since it is not yet fully functional. Khartoum has ruled out dual citizenship.

GOING HOME

More than 370,000 southerners, who are mostly Christians or animists, have gone home since October 2010. Tens of thousands more are now packing up, feeling they no longer have a future in the mainly Muslim north.

Bashir has said Sudan will adopt an Islamic constitution, while other officials have said the country needs to cut down on foreign workers to create jobs to fight an economic crisis.

Tensions erupted into direct clashes in disputed border regions last month, prompting the United Nations, United States and other global powers to warn of the possibility that full-blown conflict could renew between the former civil war foes.

On Monday, Bashir has called on South Sudan to halt aid to rebel groups north of the shared border, saying security was the key to resolving disputes that have raised global concerns the two countries could return to war.

"Despite everything that has happened, we will try to resolve the problems with South Sudan through negotiations through the ... African Union," he said.

Both are also arguing over how much the South should pay to export crude through Sudan, prompting Juba to halt its entire output to stop Khartoum seizing oil in lieu of "unpaid fees".

They also need to mark their 1,800 km (1,200 mile) border and find a security arrangement for the frontier regions, where they accuse each other of supporting rebels in their territory.

The African Union managed to bring them to the negotiating table this week after the border fighting, but talks were adjourned on Wednesday with no progress.

(Reporting by Ulf Laessing and Khalid Abdelaziz Editing by Maria Golovnina)

• A Permanent Economic Emergency