KHARTOUM (Reuters) -Fighting in Sudan's capital escalated on Wednesday with fierce clashes and air strikes, witnesses said, as delegations of rival military factions continued talks in Saudi Arabia aimed at securing a ceasefire and humanitarian relief.

Residents reported ground battles in several neighbourhoods of Khartoum between the army and the paramilitary Rapid Support Forces (RSF), as well as heavy gunfire in the north of Omdurman and the east of Bahri, two adjacent cities separated from Khartoum by the River Nile.

Since Tuesday, the army has been pounding targets across the three cities as it tries to root out RSF forces that have taken control of large residential areas and strategic sites since early in the conflict that erupted on April 15.

"There's been heavy air strikes and RPG fire since 6.30 a.m.", said Ahmed, a resident of the Bahri neighbourhood of Shambat. "We're lying on the ground and there are people living near us who ran to the Nile to protect themselves there under the embankment."

The conflict has created a humanitarian crisis in Africa's third largest nation by area, displacing more than 700,000 people inside the country and prompting 150,000 to flee to neighbouring states. It has also sparked unrest in Sudan's western Darfur region.

The U.N. World Food Programme said on Wednesday that up to 2.5 million more Sudanese were expected to fall into hunger in the coming months because of the current conflict, raising the number of people suffering acute food insecurity to 19 million.

Army and RSF delegations have been meeting since the end of last week in talks sponsored by the United States and Saudi Arabia in the Saudi Red Sea port city of Jeddah.

Negotiations aim to secure an effective truce and allow access for aid workers and supplies after repeated ceasefire announcements failed to stop the fighting.

A Western diplomat familiar with the talks in Jeddah said there had been no concrete outcome so far but mediators intended to keep going until they could secure a result.

There had been "difficult atmospherics" at the start of the talks, and mediators were trying to keep delegations tightly focussed on a ceasefire and humanitarian access rather than wider political issues, the diplomat said.

Since the battles began, the RSF have dug in across Khartoum neighbourhoods, set up checkpoints, occupied state buildings and placed snipers on rooftops.

The army has been using air strikes and heavy artillery to try to dislodge them.

Late on Tuesday the RSF said the historic presidential palace in central Khartoum, which has symbolic importance and is in a strategic area that the RSF says it controls, had been hit by an air strike and destroyed, a claim the army denied.

Drone footage filmed on Wednesday and verified by Reuters appeared to show the building, known as the Old Republican Palace, intact, though smoke could be seen coming from the southeast edge of the palace compound.

The fighting has left more than 600 people dead and 5,000 injured, according to the latest death toll from the World Health Organization, though the real figure is thought to be much higher.

Witnesses have reported seeing bodies strewn in the streets. Most hospitals have been put out of service and a breakdown of law and order has led to widespread looting. Fuel and food supplies have been running low.

"Our only hope is that the negotiations in Jeddah succeed to end this hell and return to normal life, and to stop the war, the looting, the robbery and the chaos," said Ahmed Ali, a 25-year-old resident of Khartoum.

Conflicts are not new to Sudan, a country that sits at a strategic crossroads between Egypt, Saudi Arabia, Ethiopia and the volatile Sahel region.

But most unrest in the past occurred in remote areas. This time intense fighting in Khartoum, one of Africa's biggest cities, has made the conflict far more alarming for Sudanese.

The United Nations has projected that 5 million additional people will need emergency assistance inside Sudan while 860,000 are expected to flee to neighbouring states.

(Reporting by Khalid Abdelaziz in Dubai, Mohamed Noureldin in Khartoum, Aidan Lewis and Nafisa Eltahir in Cairo, George Sargent in London and Crispian Balmer in Rome; Writing by Aidan Lewis; Editing by Edmund Blair and Christina Fincher)