Burma's government and 16 ethnic armed groups have agreed on the wording of a draft nationwide ceasefire agreement aimed at ending decades of civil unrest.

Though it was lauded as a significant step - the opposing sides have tussled over words and rights over natural resources for months - the continued fighting between the army and small rebel groups along the northern frontier highlighted the many challenges ahead.

"I'm really happy that the two sides have finally agreed on a single draft," said President Thein Sein, who briefly attended the signing. "This opens the door for political dialogue and also further peace talks."

Minutes later, representatives from the government and 16 ethnic armed groups, including the Kachin Independence Army, signed the draft accord.

The specifics were not released and it remained unclear when the final ceasefire deal would be signed.

Burma stunned the world by opening politically and economically in 2011 following elections that most rights groups said were neither free nor fair.

Though Mr Thein Sein started steering the country from a half-century of dictatorship toward democracy, early reforms have either stalled or begun regressing.

That has raised the stakes of getting ceasefire deals with all ethnic armies, one of the president's biggest pledges. Many ethnic armies have been fighting since Burma gained independence from the British in 1948, and experts say continued civil unrest is slowing development in one of South East Asia's poorest countries.

The Kachin Independence Army has been one of the most stubborn holdouts, and its agreement to sign was significant.

But fighting that started last month between rebels and the government in the Kokang region of Shan state continues, complicating ongoing talks. Tens of thousands of people have fled across the border to China. The Ta'ang National Liberation Army, also in Shan state, was refusing to sign on as well.