More than one million people have been displaced or severely affected by over three years of conflict in the two states, which include the rugged rebel-held Nuba mountains.
African Union chief mediator Thabo Mbeki, who had opened the talks last week in Ethiopia calling for an "urgent" end to fighting told reporters that both sides had shown "great seriousness" in the talks.
"We are really not too far from concluding the kind of peace agreements that the country needs," said Mbeki, a former South African president. "We are very positive for the future of the negotiations."
Previous round of talks all collapsed with fighting in the two states ongoing.
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This time leaders from both sides spoke more positively, with each thanking the other.
"We are committed... To make things happen in Sudan, and we believe we are on the right track," SPLM-N rebel delegation leader Yasir Arman said.
"We have moved ahead towards what we hope is concluding the peace," Sudan's delegation leader Ibrahim Ghandour said.
"We came with an open heart and mind in order to conclude peace...To stop the misery of our people."
Like the more than a decade long insurgency in western Sudan's Darfur region, the Kordofan-Blue Nile war has been fuelled by complaints among non-Arab groups of neglect and discrimination by the Arab-dominated regime.
Darfur rebel commander Minni Minnawi, who coordinates the Sudan Revolutionary Front (SRF), a coalition of rebels from Darfur, South Kordofan and Blue Nile, was also at the meeting.
Over 30 Darfur field commanders from different rebel groups are now meeting in Ethiopia to try to hammer out a common position ahead of talks with the government.