BOR: South Sudan's army battled rebel forces Wednesday in the capital of a key oil-producing state and prepared to storm another, as the United Nations moved to double its peacekeeping force to stave off civil war.

Thousands are believed to have been killed in more than a week of violence pitting troops loyal to President Salva Kiir against those backing his rival Riek Machar, a former vice president who was sacked in July.

Amid reports of bodies piled in mass graves, UN Secretary General Ban Ki-moon urged the two rivals to negotiate an end to the spiralling violence in the world's youngest nation, which won independence from Sudan to much fanfare just two years ago.

The unrest has taken on an ethnic dimension, pitting Kiir's Dinka tribe against Machar's Nuer.

Ban called the ethnic attacks a “grave violation of human rights” and reiterated that those responsible would be “held accountable”.

“South Sudan is under threat — but South Sudan is not alone,” Ban said in a Christmas Day radio and video message to the people of the violence-wracked nation.

The UN Security Council voted Tuesday to send nearly 6,000 extra soldiers and police to South Sudan, nearly doubling the UNMISS force to 12,500 troops and 1,323 civilian police.

Government forces have recaptured the strategic central town of Bor from forces loyal to Machar, but battles raged elsewhere including in Malakal, capital of oil-producing Upper Nile state.

An AFP correspondent who visited Bor on Wednesday said bodies littered the streets and stores were looted, with occasional gunshots still ringing out even as civilians poured back into the town.

Government forces have said they are preparing to take back Bentiu, the capital of Unity state, the most important oil-producing region.

Fighting has spread to half the country's 10 states, the UN says, with huge numbers fleeing to the countryside and others flooding UN bases seeking shelter.

The UN said aid agencies need $166 million (121 million euros) over the next three months to distribute food, manage camps for the displaced and provide health and sanitation.

“There are at least 90,000 people who have been displaced in the past 10 days. This includes 58,000 people who are sheltering in UN peacekeeping bases,”said the UN humanitarian chief in the country, Toby Lanzer.

“It is crucial that aid agencies have the resources they need to save lives in the coming months,” he said in a statement.

Lanzer said Tuesday the death toll from the fighting was into the thousands, the first clear indication of the scale of the conflict.

UN rights chief Navi Pillay said a mass grave had been found in rebel-held Bentiu and cited reports of at least two more in Juba, the capital.

Around 15 bodies were found in one site in Bentiu, and another 20 bodies at a nearby river, she said.

In Juba, the UN mission was more cautious, confirming the 15 killed but saying it was still “investigating reports of such atrocities”.

'Chaos' could engulf nation

Witnesses recount a wave of atrocities, including an orchestrated campaign of mass killings and rape.

“There are now people who are targeting others because of their tribal affiliation,” Kiir said in a Christmas message to the country, where the population is roughly divided between Christians, Muslims and those with traditional indigenous beliefs. “It will only lead to one thing, and that is to turn this new nation into chaos.”In his Christmas message, Pope Francis called for “social harmony” and warned the violence was “threatening peaceful coexistence”.

Machar has said he is ready to accept Kiir's offer of talks following days of shuttle diplomacy by African nations and calls from Western powers for an end to the fighting.

Oil production, which accounts for more than 95 per cent of South Sudan's fledgling economy, has been dented by the violence, with oil workers evacuated.

Bor's recapture, without major resistance by the rebels, lifted a nearly week-long siege of the town, where about 17,000 civilians fled into the UN compounds for protection, severely stretching limited food and supplies.

UN peacekeepers had spent days bolstering fortifications ahead of the army assault, after militia gunmen last week stormed a UN compound in the Jonglei outpost of Akobo, killing two Indian soldiers and about 20 ethnic Dinka civilians sheltering there.

Nearly 100 US troops are on the ground in South Sudan, and the US military said Tuesday had deployed a “platoon-sized” Marine contingent to neighbouring Uganda. Four US troops were wounded on Saturday when their aircraft was shot at during an evacuation operation.

South Sudan gained independence in July 2011 after a bloody decades-long struggle for independence from Sudan.