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(Corrects toll in paragraphs 1 and 4 to two children dead,

eight people wounded)

* Third bout of shelling in Kadugli in two weeks

* Government says it wants to drive rebels out of area

* Rebels say both sides exchange artillery fire

By Khalid Abdelaziz

KHARTOUM, Oct 23 (Reuters) – Sudanese rebels killed two

children and wounded eight other civilians when they shelled the

main town in Sudan’s oil-producing South Kordofan state on

Tuesday, the army said – the third bout of shelling in the past

two weeks.

Sudan’s army has been fighting SPLM-North rebels in the

state, which borders South Sudan, since June last year, shortly

before South Sudan seceded. But the South Kordofan capital

Kadugli was until recently kept out of the fighting.

Army spokesman al-Sawarmi Khalid told Reuters the rebels had

shelled an army garrison outside Kadugli but that some shells

had landed inside the town.

He said the attack led to the killing of two children, while

eight other civilians were wounded, adding that the army had

launched an operation a few days ago to “cleanse” the area

around Kadugli of rebels.

SPLM-North spokesman Arnu Lodi said the rebels had shelled

army positions inside Kadugli after coming under government

artillery fire.

“The government and our troops have been shelling each other

since this morning,” Lodi said. “They have been shelling our

forces based outside Kadugli from inside the town and we are

shooting back in self-defence.”

A resident who declined to be named said several shells had

landed in the centre of the city. “People are frightened,” he

said.

Events in Sudan’s border states are hard to verify as the

government bans foreign media from travelling there.

The rebels first shelled Kadugli on Oct. 8. At least one

rocket hit a U.N. compound, prompting the United Nations to move

its staff out of the town.

Khartoum accuses South Sudan of backing the rebels of the

Sudan People’s Liberation Movement-North, who fought as part of

the southern rebel army during Sudan’s civil war, which ended in

2005. South Sudan denies the accusation.

Fighting in South Kordofan and nearby Blue Nile state has

displaced or severely affected 900,000 people, the United

Nations said on Friday. Sudan agreed in August to let aid into

rebel-held areas but the United Nations has been unable to win

government approval to go ahead with distributing food.

Under international pressure, Sudan and South Sudan agreed

last month to establish a buffer zone along their border after

clashing along it several times in the past year. Indirect talks

between Khartoum and the rebels, however, have made scant

progress.

The SPLM-North last year formed an alliance with rebels in

the western region of Darfur with the aim of toppling Sudan’s

veteran president, Omar Hassan al-Bashir, but it is unclear how

closely the groups coordinate.

(Additional reporting by Ulf Laessing; Editing by Kevin Liffey)