A newly-formed rebel group, the Movement for Democracy in Liberia, is in control of the strategic south-eastern port town of Greenville, admits the government.
Liberian Defence Minister Daniel Chea says the group captured the town over the weekend.
Mr Chea said thousands of civilians were fleeing the south-east "to seek safety from the ongoing fighting".
The region is the centre of a logging industry which the government allegedly uses to fund arms purchases in violation of a United Nations embargo.
The minister said the rebels had also captured the north-eastern town of Tappita, near the border with Ivory Coast.
Liberia and Ivory Coast accuse each other of backing their rebel enemies.
Dozens have been reported killed in Ivory Coast in recent days, including a key Ivorian rebel leader, Felix Doh.
After months of conflict, Ivory Coast's main rebel groups signed a ceasefire with the government and have now entered a reconciliation cabinet.
The fighting is often for control of resources
A Liberian military delegation is expected to travel to Ivory Coast on Tuesday to work out details of a joint deployment along their border, assisted by West African and French troops.
A spokesman for the new rebel group, Jeeblagbeh Kuladeh, told the BBC's Focus on Africa that many of its fighters had been members of the former Armed Forces of Liberia - of the Krahn ethnic group of the late President Samuel Doe.
He refused to say how many fighters there were, or to reveal the name of its leader - but he said the leader would make himself known soon.
President Charles Taylor's government is already locked in a three-year armed struggle with Liberians United for Reconciliation and Democracy (Lurd) rebels.
Mr Chea said government troops were still battling to dislodge Lurd rebels from a town further north, Ganta.
The United Nations has imposed sanctions on Liberia because it helped rebels wage a long war in neighbouring Sierra Leone, in exchange for diamonds.
Meanwhile, the United Nations refugee agency says it is gradually re-establishing its presence in remote areas of eastern Liberia, where tens of thousands of people had been cut off from humanitarian aid for two months.
The agency said that over the past two weeks some aid workers had been able to go back after the security situation in the area improved.
The agency withdrew its staff from eastern Liberia earlier this month after an upsurge of fighting.