United Nations peacekeepers said they were concerned over claims thousands of armed youths from Machar's Nuer tribe were readying to attack Bor, the capital of Jonglei state, amid international efforts to stop two weeks of violence spiraling into all-out civil war.
"The forces of Riek Machar are now advancing on Bor, but we are confident we will hold them off and protect the town," army spokesman Philip Aguer told AFP.
"Yesterday there were heavy clashes at Gadiang north of Bor... the people in Bor fear an attack at any time."
Rebels were currently reported around 50 kilometres (30 miles) northeast of Bor.
It was not clear how many of the gunmen remained in the thick bush around Bor, but the army statement appeared to contradict claims by government spokesman Michael Makuei late on Sunday that "most of them have returned home".
Reconnaissance flights by the UN Mission in South Sudan (UNMISS) on Sunday identified armed groups but could not confirm the force's size.
The gunmen, a loose ethnic militia force loyal to Machar and dubbed the "White Army", are heavily armed - some carrying automatic rifles or spears, others armed with rocket propelled grenades. They are known for smearing white ash onto their bodies as war-paint and to ward off insects.
The world's youngest nation plunged into chaos on December 15 when President Salva Kiir accused his former deputy of mounting a coup, sparking deadly violence believed to have left thousands dead.
Ceasefire deadline on Tuesday
Regional leaders at the Inter-Governmental Authority on Development (IGAD) have set on Tuesday as a deadline for face-to-face talks between Kiir and Machar.
While the government has said it was willing to observe a ceasefire, Machar - who was sacked as vice-president in July - has made demands including the release of his arrested political allies before committing to a truce.
South Sudanese government spokesman Makuei told AFP on Sunday: "I really doubt if we, the South Sudanese government, will be in a position to sit with Riek Machar... He has not even respected the call by IGAD and the African Union to agree to the cessation of hostilities."
Grim reports of massacres, rapes and killings nationwide have emerged on both sides of the conflict.
Rebels swiftly took over several key regional cities including Bentiu, in the northern oil-producing state of Unity, and Bor, which was later recaptured by the army.
There was also heavy fighting in the town of Malakal, state capital of oil-producing Upper Nile, but the army said they were back in full control.
A video posted by UN humanitarian chief in South Sudan Toby Lanzer in Malakal showed burnt and looted stores and buildings in the centre of town.
"The situation in Malakal is stable, we are in control," Aguer added.
Oil production, which accounts for more than 95 per cent of South Sudan's fledgling economy, has also been hit with oil companies evacuating employees.
The UN says some 75,000 have sought refuge in badly overstretched peacekeeper bases across the country, and over 180,000 are displaced across the country.
Tens of thousands of Sudanese refugees are also reported to have been affected.
UN peacekeeping reinforcements began arriving in the country last week, the spearhead force of some 6,000 extra troops voted for by the UN Security Council, that will nearly double the size of the mission in the country.
UNMISS chief Hilde Johnson is to brief the UN Security Council later on Monday on the crisis.
South Sudan became independent in 2011 after a civil war that killed more than two million people between 1983 and 2005.
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