The BBC's Andrew Harding says it appears Bentiu was recaptured from rebels with just a "small amount of resistance"
South Sudan's army is advancing on the key rebel-held centres of Bentiu and Bor, as rebels strengthen defences in Bentiu.
An army spokesman was quoted as saying that government troops were "next to Bentiu" and some 15km (9 miles) away from Bor. Reports say hundreds have fled violence in Bor.
At least 1,000 people have been killed in fighting since 15 December.
Regionally brokered talks to declare a ceasefire have stalled.
People who escaped the violence told AFP news agency that gunmen shot dead fleeing civilians, torched entire villages and looted crops.
A cattle herder who swam across a river to escape said he was fortunate to survive.
"They [the attackers] had a machine gun raised up on a sandbank, and they fired and fired and fired as we swam," Gabriel Bol told AFP.
"The bullets were hitting the water, but we knew we could not stop or they'd shoot us."
Hundreds of people were fleeing to the town of Minkammen, about 25km (15 miles) south of Bor.
About 80,000 people had already taken refuge there, AFP reports.
Ethnic dimension
Meanwhile, South Sudan's rebels are strengthening their defences in Bentiu in anticipation of a government offensive to recapture it.
The BBC's Alastair Leithead in the city says rebels brought a tank into the city in the oil-rich area, as the front line moves closer.
However, he says the city was quiet on Friday morning.
On Thursday, heavily armed men looted Bentiu's city centre, while thousands of residents fled to a UN base, a UN official said.
More than 200,000 people have been displaced by the fighting.
The conflict erupted after President Salva Kiir accused his ex-deputy, Riek Machar, of plotting a coup - a charge he strongly denied.
The fighting has turned former comrades into enemies
More than 200,000 people have fled their homes because of the fighting
Mr Kiir (in black hat) visited Bentiu with Mr Machar when they were allies
Mr Machar is backed by army deserters, believed to number at least 10,000, and militias from his Nuer ethnic group.
Mr Kiir comes from South Sudan's largest ethnic group, the Dinka.
Although both leaders have influential backers from the other's community, the conflict has often taken an ethnic dimension.
Our reporter says he heard explosions and saw plumes of smoke coming out of a rebel-held military base on the road to Bentiu early on Thursday.
It seems the rebels were destroying ammunition as they withdrew from the front line, to prevent it from falling into the hands of advancing government troops, he says.
Mr Kiir's forces are believed to be about 25km from Bentiu, capital of Unity state.
The state is rich in oil, the main foreign exchange earner of South Sudan.
'Civilians killed'
Oil production has dropped by 20% since the conflict started.
Civilians from the Nuer community have been streaming into the UN base in recent days, unlike a few weeks ago when the rebel seizure of Bentiu led to Dinkas taking refuge at the base, our correspondent says.
The base is now split into three, with a section for each of the two groups and a third for foreign nationals, he adds.
The hospital in Bentiu was empty, a doctor who worked there said.
"Even the wounded patients ran away,"Dr Hassan Mugne said on Twitter, external.
The UN's Deputy Special Representative in South Sudan, Toby Lanzer,tweeted, external that rebel forces had looted and largely destroyed shops in Bentiu's market.
There were "virtually no" civilians in the centre of Bentiu, while armed men had been looting shops, as well as aid agency property, he said.
The BBC outlines the background to South Sudan's crisis - in 60 seconds.
More than 2,000 people are fleeing into neighbouring Uganda from South Sudan every day, the BBC's Kasim Kayira reports from northern Uganda.
There are not enough medical and sanitation facilities in the area to cope with the number of arrivals, our correspondent reports.
On Wednesday, the International Committee of the Red Cross (ICRC) said the humanitarian situation in South Sudan was dire.
South Sudan is the world's newest state.
It became independent in 2011 after seceding from Sudan.
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%).
