* North says its troops should stay until Abyei referendum
* South official repeats call for north to pull out of Abyei
(Adds background on Abyei, edits)
By Alex Dziadosz and Jeremy Clarke
KHARTOUM/JUBA, June 1 (Reuters) - North Sudan's government laid out new proposals to resolve a dispute with the south over the central Abyei region, including setting up a rotating administration for the contested territory.
Khartoum seized Abyei on May 21, sparking an international outcry and stoking fears the two sides could return to full-blown conflict over the oil-producing region, also coveted for its fertile grazing land.
Tens of thousands of people fled the fighting.
The proposals announced late on Tuesday said the northern military should stay north of the Bahr al-Arab river and southern forces should remain south "without participating in any administrative tasks until a final solution is reached through a referendum".
The waterway, known as the Kiir River in the south, runs south of Abyei's main town and was a conflict zone during the last north-south civil war, which killed some 2 million people.
Under the north's proposals, Abyei's administration would be transferred to a joint north-south committee on July 8, the day before the south is scheduled to secede, a statement carried by the state news agency SUNA said.
A senior official with the southern ruling party said sharing Abyei's administration "doesn't do justice to the people of Abyei or the current situation there," and repeated calls for the north to withdraw its forces.
"MORE EFFECTIVE" TROOPS
Southerners voted overwhelmingly for secession in a January referendum promised by the 2005 Comprehensive Peace Agreement (CPA) that ended decades of civil war. Issues such as the common border line have not been settled yet.
A separate referendum was scheduled for Abyei to determine its status, but that vote has not happened.
"The north must pull its forces out of Abyei, it is a violation of the CPA," Anne Itto, deputy secretary general of the Sudan Peoples' Liberation Movement (SPLM), told Reuters.
"The shared administration of Abyei ended a long time ago, on January 9, when the people of Abyei were meant to hold their own referendum," she added.
The Abyei region is used all year round by the south-linked Dinka Ngok people and for part of the year by northern Arab Misseriya nomads.
The north's proposals also suggested international peacekeepers should be replaced by "more effective" African troops. A U.N. spokeswoman said the organisation had seen the proposals and was studying them.
Ethiopia, seen as an honest broker by both sides, said on Tuesday it would consider dispatching peacekeepers to Abyei if both Juba and Khartoum lodged a request. [ID:nLDE74U1ZV]
Southern officials have so far played down the risk of armed conflict over Abyei. South Sudan's President Salva Kiir said last week the south would not go to war over the incursion.
Vice President Riek Machar flew to Khartoum this week to meet with officials in an attempt to ease tensions. He said the two sides had agreed to form a committee to resolve the dispute.
South Sudan is facing a host of other challenges as it moves toward independence, including internal rebel movements and a severe lack of infrastructure. (Editing by Giles Elgood and Paul Taylor)
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