Rebels in South Sudan took control of nearly all of a strategic city, even as the government and fighters agreed to hold talks for the first time.
The bloodshed has killed more than 1,000 people - a number believed to be a low estimate - and has seen the country's two most powerful ethnic groups turn on each other.
The US envoy to the region, Donald Booth, met President Salva Kiir yesterday - their fourth meeting in eight days - and spoke by phone with the former vice president Riek Machar, who is accused by the government of having tried to carry out a coup, which he denies.
Mr Booth said the commitment to meet by the two sides was a "first step but very important step" towards achieving a cessation of hostilities and substantive talks to resolve the underlying political issues that could bring a halt to the violence.
Earlier, heavy fighting erupted in Bor, the contested provincial capital of Jonglei state, a short drive from the capital Juba. Government troops battled renegade forces loyal to Mr Machar including the Nuer tribal militia known as the White Army.
South Sudan's government had been warning of a looming battle for Bor, at one point saying 25,000 armed youths were moving towards the city. That number was later lowered but enough forces converged yesterday to take control of most or all of the city, said a senior US official.
Bor is the town where gunfire hit three US military aircraft trying to evacuate American citizens on December 21, wounding four service members.
A pro-Machar commander who defected from South Sudan's military, Peter Gadet, mobilised "elements of the White Army" in a bid to retake the town, said the government's military spokesman Col Phillip Aguer.
The White Army is named after the ash fighters put on their body to protect themselves from insects.
The recapturing of Bor could give Mr Machar an upper hand at the negotiating table. But international officials have urged him not to move his troops past Bor towards Juba.
On Monday Ugandan president Yoweri Museveni warned Mr Machar to report to the negotiating table, or "we shall have to go for him, all of us". Ugandan troops and several of their attack helicopters are already in South Sudan assisting the military and international community does not want to see more countries become involved in the warfare.
Mr Machar appears to be sending representatives to the negotiating table even though one of his earlier demands - that about a dozen top-level political prisoners being held by the government be released - has not yet been met. He has not repeated his demand in recent days that Mr Kiir step down as president.
White House spokeswoman Caitlin Hayden welcomed the talks agreement between the South Sudan government and rebels and urged both sides to take immediate steps to end the current conflict. But she said the White House remained "deeply concerned" about the fragile security situation.
Ms Hayden said the US would deny support to any elements that used force to seize power and would work to ensure accountability for those perpetrating atrocities and war crimes. She said the US was concerned about reports of human rights abuses allegedly carried out by both the government and rebel forces.
South Sudan has been hit by unrest since December 15, when fighting among presidential guards later spiralled into ethnically-based violence across the country.
Although an uneasy calm has been restored in the capital, violence persists in other parts of the oil-producing East African country. Rebel forces still control the oil-producing centre of Bentiu.
Regional leaders under a bloc known as IGAD last week set yesterday as the deadline for peace talks.
Although Mr Kiir insists the latest unrest was sparked by a coup mounted by soldiers loyal to Mr Machar, his account has been disputed by some in the ruling party who say violence broke out when presidential guards from Mr Kiir's majority Dinka tribe tried to disarm guards from the Nuer ethnic group of Mr Machar.
The UN mission in South Sudan said it was "gravely concerned about mounting evidence of gross violations of international human rights law" across South Sudan since mid-December.
South Sudan has been plagued by ethnic tension and a power struggle within the ruling party that escalated after Mr Kiir sacked Mr Machar as his deputy earlier this year. Mr Machar has called Kiir a dictator and says he will contest the 2015 presidential election.
The United Nations, South Sudan's government and other analysts say the dispute is political at its heart, but has since taken on ethnic dimensions. The fighting has displaced up to 180,000, according to the UN.