South Sudanese troops are preparing to enter the rebel-held town of Bor, President Salva Kiir has said.
Mr Kiir told parliament the army was "ready to move", adding that the counter-attack had been delayed to allow US citizens to be airlifted out.
Bor, in the restive state of Jonglei, fell to rebels on Wednesday.
A week of ethnic violence has raised fears of civil war. UN humanitarian staff have described bloody scenes, including summary executions.
Earlier the South Sudanese army confirmed that Bentiu, the capital of oil-rich Unity State, had also fallen to fighters supporting former vice-president Riek Machar.
President Kiir, a member of the majority Dinka ethnic group, sacked Mr Machar, who is from the Nuer community, in July.
The president has accused Mr Machar of attempting a coup, which he denies.
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