Hundreds of civilians were captured and massacred by rebel gunmen in South Sudan after the oil town of Bentiu was held hostage to perform ethnic killings last week, the United Nations reported.

In what is one of the worst reported atrocities in the war-torn nation, the UN said "more than 200 civilians were reportedly killed and over 400 wounded" in the town's main mosque, the Agence France-Presse reported.

A church, hospital and an abandoned UN World Food Program compound were also part of the massacres, the UN's peacekeeping mission in South Sudan said.

The most recent incident saw fighters demanding for the eviction of rival groups out of the town and men being encouraged to rape women from the opposition ethnic group through radio sermons.

"South Sudan's army has been fighting rebels loyal to sacked vice-president Riek Machar after the insurgents launched a renewed offensive targeting key oil fields," AFP reported. "The conflict has also taken on an ethnic dimension, pitting President Salva Kiir's Dinka tribe against militia forces from Mr. Machar's Nuer people."

AFP added, "UN human rights investigators said that after rebels wrested Bentiu from government forces in heavy battles last Tuesday, the gunmen spent two days hunting down those they believed opposed them."

Both South Sudanese and Sudanese, with some from the war-torn Darfur region, were killed, UNMISS said in its statement.

"They (the rebels) searched a number of places where hundreds of South Sudanese and foreign civilians had taken refuge, and killed hundreds of the civilians after determining their ethnicity or nationality," the UN said.

At the Kali-Ballee mosque, where hundreds had taken shelter, the rebels "separated individuals of certain nationalities and ethnic groups and escorted them to safety, while the others were killed", the statement continued.

South Sudan, the world's youngest nation, gained independence from Sudan in 2011. However, the separation left thousands of people dead and forced around 1 million people to flee their homes.

Reports and allegations of atrocities by both sides, with ethnic massacres, child soldier recruitment and patients raped and murdered in hospitals by attacking forces have continuously marked the fighting, AFP reported.