South Sudanese troops on Friday recaptured the key northern oil city of Bentiu, although the leader of the rebels vowed to fight on against the government.
People walk in a camp of internally displaced people in Minkammen, 25 kilometres (16 miles) south of Bor, on January 10, 2014
A spokesman for President Salva Kiir said the city, one of two state capitals that were in rebel hands, was "now under our control", following days of fierce fighting that has forced tens of thousands to flee the area.
Speaking to AFP by satellite telephone from an undisclosed location, rebel leader Riek Machar admitted that anti-government troops had abandoned the city, but vowed they would press on with their nearly month-old fight.
"We withdrew from Bentiu, but it was to avoid fighting in the streets and save civilian lives. We fight on, we will continue the battle," Machar told AFP by satellite telephone from an undisclosed location in the country.
He nevertheless said the rebel side would continue to be engaged in peace talks that are taking place in neighbouring Ethiopia.
"Yes, we are committed," he said, without giving any indication if he was willing to agree to an immediate and unconditional ceasefire.
A rebel military spokesman described the loss of Bentiu -- already ransacked and mostly emptied of its civilian population -- as a "temporary setback", and insisted that oil infrastructure around the city was still in rebel hands.
"The government does not have the capacity to defeat us militarily," Lul Ruai Koang said.
The government, however, said it was mobilising thousands of additional troops -- now expected to join the offensive on Jonglei State capital Bor, the last remaining rebel stronghold.
In neighbouring Ethiopia, regional mediators said they were still optimistic that peace delegates from the two sides meeting in a luxury hotel in Addis Ababa would agree to a ceasefire.
The United Nations has said that "very substantially in excess" of 1,000 people have already been killed in the fighting, and that nearly a quarter of a million people have fled their homes -- many of them fleeing a wave of ethnic violence.
However, the International Crisis Group, an independent think-tank, said reports from across the world's newest state indicate that the real death toll is far higher.
"Given the intensity of fighting in over 30 different locations in the past three weeks, we are looking at a death toll approaching 10,000," ICG analyst Casie Copeland said.
Fighting began on December 15, when Kiir accused his former deputy Machar of attempting a coup, and rapidly spread with government units divided along ethnic lines and local militia forces siding with the rebels.
Both sides are accused of having committed atrocities, amid a wave of ethnic violence pitting Kiir's majority Dinka tribe against Machar's Nuer community. South Sudan's oil production, crucial to its economy, has dropped by an estimated 20 percent following the evacuation of oil workers from northern parts of the country.
The United States, which was instrumental in helping South Sudan win independence from Khartoum in 2011, also said it feared the country risked imploding and urged the two sides to immediately agree to a truce.
"Today, tragically, the world's youngest country and undoubtedly one of its most fragile democracies is in danger of shattering," US Assistant Secretary for Africa Linda Thomas-Greenfield told lawmakers in Washington.
An estimated 60,000 people have sought UN protection from the ethnic violence, forcing the Security Council to approve an extra 5,500 peacekeepers who are only slowly arriving.
UN peacekeeping chief Herve Ladsous said the reinforcements would allow UN forces "to go into a more pro-active footing around the bases and beyond, because the situation in terms of violations of human rights remains terribly critical".
Aid agencies seeking to assist the displaced and wounded are also struggling.
Doctors without Borders (Medecins Sans Frontieres - MSF) said its facilities in Bentiu were looted, while other aid organisations have reported similar incidents -- including cars being stolen at gunpoint.
"It is unacceptable that one of the only humanitarian organisations still providing assistance to the population in Bentiu has been looted," says Arjan Hehenkamp, MSF general director.
"MSF calls on all parties to this conflict to respect the integrity of medical facilities grant access to affected communities and allow patients to reach medical facilities irrespective of their origin and ethnicity."
Mediators said the peace talks were moving forward despite the ongoing fighting, and that delegates from both sides were reviewing a draft ceasefire agreement.
The proposal calls on both sides to "cease all military action aimed at each other" and to "agree to immediately cease all military operations and freeze their forces," according to a draft seen by AFP.
In addition, it called for immediate humanitarian access to permit the "urgent supply of aid to all displaced populations," according to the proposal.
However, the imprisonment of 11 high-ranking politicians close to Machar remains a major stumbling block, and the rebels have maintained their demand that they be freed before agreeing to a truce. Kiir, meanwhile, has insisted they will not be set free without a legal process.