Sudan claims the oil fields in the town of Heglig, which account for about half of the nation's oil production.
A spokesman for South Sudan's military said Wednesday that his country's soldiers have been defending the territory from attacks by Sudanese forces for the past two days.
South Sudan's military now occupies oil fields and other areas of Heglig, according to Philip Aguer, the spokesman.
"That is South Sudan," he said. "Khartoum has refused to demarcate the border. We know where the border is."
Sudan also claims ownership of Heglig and lodged complaints with the United Nations Security Council and the African Union on Wednesday, urging them to pressure South Sudan to withdraw troops from its territory.
Sudan's parliament approved "general mobilization" of the country's resources to support the military. It also voted to withdraw from negotiations with South Sudan that have been ongoing since the South declared independence last July.
Aguer called the parliamentary decisions "a public relations exercise" and accused Sudan of carrying out attacks even during the peace talks.
"There was no negotiation as far as I am concerned," he said. "The SPLA (South Sudan military) at the border were being bombed even when the politicians were talking."
Sudan has repeatedly bombed southern territory since independence, including the November attack of a refugee camp in the neighboring nation's Unity state.
South Sudan fought a two-decade civil war against the government in Khartoum, which led to secession.
When they separated, South Sudan acquired three quarters of Sudan's oil reserves. The two countries have been locked in negotiations about how much the landlocked South Sudan should pay to use a pipeline and processing facilities in the north.
In late July, South Sudan halted oil production after accusing Sudan of "stealing" $815 million worth of its crude. Sudan said it confiscated the oil to make up for unpaid fees.
The African Union-led negotiations also cover other outstanding issues since secession, including the status of citizens of both countries who find themselves living on either side of the world's newest international border. The fate of the Abyei region and other disputed border areas are also a point of contention.
Sudanese President Omar al-Bashir was scheduled to travel to the southern capital of Juba earlier this month to meet with his counterpart Salva Kiir. The presidents were to sign agreements on citizenship and border demarcation, but Khartoum canceled the trip after fighting broke out along the border.
South Sudan's sovereignty officially broke Africa's largest nation into two, the result of a referendum last year overwhelmingly approved by voters.
The referendum was part of a 2005 peace deal that ended decades of civil war pitting a government dominated by Arab Muslims in the north against black Christians and animists in the south. The war killed about 2 million people.
