Fresh fighting has erupted in the flashpoint South Sudanese town of Bor after anti-government groups launched an attack, even as the regional African bloc threatens targeted sanctions and military intervention if rival army factions fail to stop hostilities.

"We are fighting the rebels now," Mayor Nhial Majak Nhial told Reuters from the outskirts of Bor.

Regional leaders had earlier given a ceasefire deadline of Tuesday (31 December), which is unlikely to be met, given the raging violence.

To quell the clashes in the landlocked middle African country, the African Union (AU) has said it will impose targeted sanctions on the camps which incite violence in the oil-rich South Sudan.

The Peace and Security Council of the AU said in a statement: "[Council] expresses its intention to take appropriate measures, including targeted sanctions, against all those who incite violence, including along ethnic lines, continue hostilities [and] undermine the envisaged inclusive dialogue."

South Sudan, the world's youngest country, has been reeling under intensified violence since mid- December as rival army factions launch attacks against each other.

President Salva Kiir, an ethnic Dinka, has been accusing ousted former vice-president Riek Machar, who hails from the Nuer tribe, of attempting a coup against the government leading to the clashes, which have claimed at least 1,000 lives so far.

The AU's latest proposal has come close on the heels of Ugandan President Yoweri Museveni's announcement stating the neighbouring African forces will intervene to stop the violence if Machar does not halt the rebel attacks.

Uganda is also a member of the eight-member trading bloc, the Intergovernmental Authority on Development (IGAD), whose leaders are attempting to broker a deal with the South Sudanese government and opponents in the conflict.

There are also growing concerns over IGAD's increasing involvement in the armed crisis, as certain groups in South Sudan accuse the bloc of siding with Kiir.

"We gave him [Machar] four days and [agreed that] if he doesn't [comply], then we shall have to go for him. That is what we agreed on," said Museveni after a closed-door meeting with Kiir in the South Sudanese capital of Juba.

Although other nations of the IGAD have not spoken openly about military intervention, the Ugandan leader's remarks reflect the escalation of the crisis.

Some opposition groups also claim Ugandan troops and warplanes are already present in South Sudan supporting Kiir's forces but Uganda has denied it.