Much of Abyei town was destroyed in the recent violence
Rival troops from north and south are converging on central Sudan, a UN official has told the BBC.
UN regional co-ordinator for South Sudan David Gressley said the country was "on the brink".
The warning follows recent clashes in the oil-rich region of Abyei, which is claimed by both sides.
But Mr Gressley said the troop buildup in the area could unravel the 2005 peace agreement which ended two decades of civil war.
On Tuesday, the US envoy to Sudan warned that leaders from both sides were not interested in peace.
Leaders from both sides tried to downplay the fears of renewed conflict.
The warnings come as the UN Security Council is in Sudan, trying to ease tensions in Abyei, as well as the western region of Darfur.
"There's a gradual escalation of forces on all sides at this point in time," Mr Gressley said.
Mr Gressley said he did not think either side wanted a war, at this point, but that the situation had to be de-escalated or it could unravel the entire peace process.
BBC world affairs correspondent Mark Doyle says that would spell a new drama in Sudan, which already has millions of war-displaced people.
Some 50,000 people - virtually the entire population - fled the heavy fighting in Abyei town last month.
The area contains oil wells which generate billions of dollars, but our correspondent says more than money is at stake - Abyei is coming to symbolise a new breakdown in trust between the mainly Arab north and South Sudan.
The two sides signed a peace deal in 2005 and the former southern rebels joined the national government.
Under this deal, the mainly Christian and animist south is due to hold a referendum in 2011 on whether to secede.
South Sudan leader Salva Kiir raised the issue of Abyei with the UN Security Council envoys.
"We are not looking for war," he said, adding that keeping the peace depended on the political will of northern leaders.
Northern politician Abdul Mahmoud Abdulhalim told the BBC that there were no troops heading for Abyei.
But western diplomats seem increasingly worried.
US envoy to Sudan Richard Williamson on Tuesday announced that talks to normalise relations between the two countries had been suspended because of the lack of progress on peace talks.
"I won't be part of a sham peace that won't change the situation," he said.
Sudan is on a US list of countries accused of links to terrorism and so is subject to financial sanctions.
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