Cambodian soldiers carry the body of a comrade near Preah Vihear templeThey began talks around 11:00 am (0400 GMT) in Thailand to discuss troop levels and weaponry, as both governments said they were seeking to calm the situation and mend relations.
Gunfights broke out Wednesday in a number of small plots of disputed land near the 11th century Preah Vihear temple, a UN World Heritage site on Cambodian territory and the focus of months of tensions.
"My government still sticks to negotiation, although the clash was not serious," Thai Prime Minister Somchai Wongsawat told reporters.
Cambodian Foreign Minister Hor Namhong said the situation along the border had eased since Wednesday and that diplomats from both countries met in Bangkok shortly after fighting erupted.
"The Thai ministry of foreign affairs asked the Cambodian embassy in Thailand for a meeting and there was a good conversation," Hor Namhong said.
Two Cambodian soldiers were killed in Wednesday's clashes and several from each side were wounded. Thailand's foreign ministry said Thursday seven of its soldiers were hurt.
A third Cambodian soldier who had already been ill died early Thursday of smoke inhalation from repeatedly firing his rocket-launcher, said Cambodian Major Meas Yeoun.
The United States and United Nations have called for restraint and Lieutenant General Surapol Puanaiyaka, of Thailand's top security body the National Security Council, said there was little danger of outright war.
"I am confident that the situation will not blow out of hand or escalate into full-scale warfare," he said.
The situation on the border appeared calmer Thursday as soldiers smiled and exchanged cordial words, an AFP correspondent there said, but civilians have fled the area and Thai expatriates and tourists are leaving Cambodia.
Some 432 Thais who were in Cambodia when the border fighting broke out returned to Thailand after the Bangkok government appealed for anyone not on urgent business to leave, an official said.
"We have convinced them to return on a Thai Airways flight," said foreign ministry spokesman Tharit Charungvat.
Cambodian riot police were deployed Wednesday in front of the Thai embassy in Phnom Penh, which was set on fire by anti-Thai rioters in 2003.
Cambodian interior ministry spokesman Khieu Sopheak said undercover police were monitoring Thai businesses to ensure their safety.
"We're protecting all Thai businessmen and citizens in Cambodia in case our people get furious and do something wrong that would not benefit either side," Khieu Sopheak told AFP.
Cambodian and Thai officials have disputed who started Wednesday's clashes.
The Cambodian army has said it is holding 13 Thai soldiers after they surrendered in a disputed area during fighting but Thai military and foreign ministry officials denied any of their troops had been captured.
The stand-off first flared in July after Preah Vihear was awarded World Heritage status by the UN cultural body UNESCO, angering some Thai nationalists who claim ownership of the site.
The situation quickly escalated into a military confrontation, with up to 1,000 Cambodian and Thai troops facing off for six weeks, although both sides in August agreed to reduce troop numbers in the main disputed area.
Tensions flared again this week after talks on Monday aimed at cooling the months-long standoff failed.
The Cambodian-Thai border has never been fully demarcated, in part because it is littered with landmines left over from decades of war in Cambodia.
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