The South Sudanese army says it has recaptured the key town of Malakal from rebels, after days of heavy fighting.
But the rebels have told the BBC they are still in control of the town.
Rebel forces staged an attack last week to seize Malakal, which is the gateway to the oilfields of the Upper Nile region.
Around 500,000 people have been displaced in South Sudan's month-long conflict between the government and rebels, according to UN estimates.
Some 200 civilians drowned in a Nile ferry accident while fleeing fighting in Malakal last Sunday.
Talks to try to find a ceasefire are continuing in Ethiopia.
'Flushed out'Malakal has already changed hands several times since the conflict broke out in December.
Army spokesman Philip Aguer said on Monday that the rebels "were flushed out of the town" and Malakal was "finally in the hands" of South Sudanese troops again.
He told BBC Focus on Africa there had been casualties on both sides after fierce fighting.
But a spokesman for the rebels denied that they had left Malakal.
"Malakal is still in the hands of our forces", Brig-Gen Lul Ruai Koang said.
"Some elements from the government forces attempted to attack Malakal from the southern part of that town and they were repulsed and they suffered heavy casualties."
Government troops earlier regained control of the key strategic town of Bor in Jonglei state.
The fighting has turned the town into a scene of absolute devastation, the BBC's Mark Lowen, in Bor, reports.
Meanwhile, ceasefire negotiations are being held in a hotel in the Ethiopian capital, Addis Ababa.
Correspondents say the talks have stalled because both sides are aiming for an upper hand in the fighting before real negotiations begin.
The release of political detainees continues to be a key issue that must be resolved.
The recapture of Malakal - the last major town under rebel control - may break the deadlock in ceasefire talks, but rebels still control large areas of the countryside.
Reports of atrocitiesOn Friday, UN Human Rights fact finder Ivan Simonovic said both government soldiers and rebels had committed atrocities.
He told the BBC there had been reports of "mass killings, extra-judicial killings, arbitrary detention, enforced disappearances, sexual violence, widespread destruction and looting of property and use of the children in conflict".
The violence first erupted on 15 December between forces loyal to President Salva Kiir and soldiers backing Riek Machar, his former vice-president.
President Kiir is a member of South Sudan's largest ethnic group, the Dinka, while Mr Machar is from the Nuer community - the country's second largest.
The president accuses his ex-deputy of plotting a coup - an accusation Mr Machar denies.
The conflict has seen reports of mass killings along ethnic lines even though both men have prominent supporters among their rival's community.
The UN estimates that more than 1,000 people have died in the unrest.
South Sudan seceded from Sudan in 2011 after a long and bloody conflict, to become the world's newest state.
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 
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