The United Nations (UN) has accused South Sudanese rebels of violating a ceasefire by launching an offensive to recapture its former headquarters.
The attack on Nasir town was the "most serious resumption of hostilities" since May, the UN said.
The rebels said they had seized the town in an act of "self-defence". The government denied the town had fallen.
Fighting between government and rebel forces broke out in December, leaving more than a million homeless.
President Salva Kiir and rebel leader Riek Machar met in May and recommitted themselves to a ceasefire negotiated in January by regional leaders.
Rebel spokesman Lul Kuang said they launched an offensive because of several attempts by government forces to arrest their commander.
Hundreds of thousands of people are living in refugee camps
"The fall of Nasir now paves the way for military resources to be refocused on Poloich Oil Fields, Maban and Malakal," Mr Kuang said in a statement.
South Sudanese army spokesman Philip Aguer denied Nasir had fallen following clashes between the two sides.
"It is deplorable that this major attack comes at a time when intensive efforts are under way by mediators of the Intergovernmental Authority on Development (IGAD) to convince all parties to resume the suspended peace talks in Addis Ababa," Unmiss acting head Raisedon Zenenga said in the statement.
"The attack is a clear violation of the cessation of hostilities agreement," he added.
South Sudan is the world's newest state and became independent in 2011.
Conflict erupted in December after Mr Kiir accused Mr Machar, his sacked deputy, of plotting a coup.
Mr Machar denied the allegation, but then marshalled a rebel army to fight the government.
The UN has about 8,500 peacekeepers in South Sudan. They have struggled to contain the conflict.
Fighting erupted in the South Sudan capital, Juba, in mid-December. It followed a political power struggle between President Salva Kiir and his ex-deputy Riek Machar. The squabble has taken on an ethnic dimension as politicians' political bases are often ethnic.
Sudan's arid north is mainly home to Arabic-speaking Muslims. But in South Sudan there is no dominant culture. The Dinkas and the Nuers are the largest of more than 200 ethnic groups, each with its own languages and traditional beliefs, alongside Christianity and Islam.
Both Sudan and the South are reliant on oil revenue, which accounts for 98% of South Sudan's budget. They have fiercely disagreed over how to divide the oil wealth of the former united state - at one time production was shutdown for more than a year. Some 75% of the oil lies in the South but all the pipelines run north.
The two Sudans are very different geographically. The great divide is visible even from space, as this Nasa satellite image shows. The northern states are a blanket of desert, broken only by the fertile Nile corridor. South Sudan is covered by green swathes of grassland, swamps and tropical forest.
After gaining independence in 2011, South Sudan is the world's newest country - and one of its poorest. Figures from 2010 show some 69% of households now have access to clean water - up from 48% in 2006. However, just 2% of households have water on the premises.
Just 29% of children attend primary school in South Sudan - however, this is also an improvement on the 16% recorded in 2006. About 32% of primary-age boys attend, while just 25% of girls do. Overall, 64% of children who begin primary school reach the last grade.
Almost 28% of children under the age of five in South Sudan are moderately or severely underweight. This compares with the 33% recorded in 2006. Unity state has the highest proportion of children suffering malnourishment (46%), while Central Equatoria has the lowest (17%).
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