(adds AU report on attack)

By Abigail Hauslohner

NYALA, Sudan, Sept 11 (Reuters) - Ongoing violence in Sudan's Darfur region threatens to undermine peace talks planned for October between Khartoum and rebel groups, a British minister said as he toured the war-torn area on Tuesday.

British Foreign Office Minister for Africa Mark Malloch Brown made the remarks as the African Union said it was deeply concerned about "fierce fighting" in the Darfur town of Haskanita.

The timing of the attack, seven weeks before planned peace talks and four days after a visit to Sudan by U.N. Secretary-General Ban Ki-moon was "very alarming", the AU added.

The International Committee of the Red Cross also reported an "increased number of clashes" in Darfur in recent weeks, and said the security situation was taking a toll on aid operations.

A Sudanese army spokesman was not immediately available for comment.

Malloch Brown, on a day-long trip to Darfur, told Reuters: "My message is that the government should try to stop all offensive action and the rebels should do the same.

"At the moment, we are pushing a constructive diplomatic engagement trying to get everyone to the talks. If that approach fails, then we'll come down hard on whatever side is responsible for that, whether that is the rebels or the government."

Khartoum signed a joint communique with the United Nations last week that included pledges to cease hostilities in Darfur, prepare for the arrival of a 26,000-strong joint U.N.-African Union peacekeeping mission, and lay the foundations for peace talks in Libya on Oct. 27.

Malloch Brown said sanctions were "in reserve" and measures taken against rebel groups could include a reduction in the support offered them in foreign countries.

He said Britain would not be contributing soldiers to the peacekeeping force, in line with Khartoum's demand for a predominantly African presence in Darfur, but was ready to fill funding gaps, including paying to airlift the first Nigerian and Rwandan brigades to Darfur next month.

INCREASING CLASHES

International experts estimate some 200,000 people have died and 2.5 million have been displaced in over four years of violence in Darfur, which Washington calls genocide.

Khartoum denies genocide and says the Western media overplay the conflict. The International Criminal Court is investigating war crimes allegations in the region.

Denise Duran, head of ICRC's Darfur operation, said: "The precarious security situation makes it extremely hard to plan and carry out field activities.

"This means that the communities most at risk in rural areas are often reachable only sporadically."

In the most recent violence, the African Union said, Sudanese forces used "heavy weapons including helicopter gunships" in an attack on the rebel-held town of Haskanita on Monday during which AU soldiers had to take cover.

The AU statement was the first independent verification of the attacks, first reported by two Darfur rebel groups: the Justice and Equality Movement (JEM) and the Sudan Liberation Army's Unity (SLA-Unity), who said seven of their fighters died in the assault.

The statement said: "Given the critical stage of the peace process, the forthcoming negotiations in Libya and the commitments made by all parties to uphold the ceasefire, the nature, scale and timing of these attacks is astonishing."

International observers who did not want to be named said it was likely the attack was in retaliation for a joint JEM/SLA-Unity assault on a government base east of Haskanita in Sudan's Kordofan region at the end of August.

The rebel attack in the town of Wad Banda killed 41 people. The Justice Ministry has launched an inquiry into six JEM members it suspects masterminded that attack. (Additional reporting by Simon Apiku and Andrew Heavens in Khartoum; and Stephanie Nebehay in Geneva)

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