UN diplomats said they had been told by sources in the capital, Juba, that the death toll was between 400 and 500.
South Sudan has seen two days of clashes following a reported coup attempt against President Salva Kiir.
The president of the UN Security Council told the BBC there was "potential" for civil war.
Earlier, the government said 10 senior political figures, including the former finance minister, had been arrested.
President Kiir said a group of soldiers supporting former Vice-President Riek Machar had tried to take power by force on Sunday night, but were defeated. He has ordered a dusk-to-dawn curfew in the capital.
Details of the fighting have been sketchy, but a meeting of the UN Security Council in New York on Tuesday was told that the clashes were "apparently largely along ethnic lines".
French UN ambassador Gerard Araud, who holds the rotating presidency of the Security Council, said up to 20,000 people had taken refuge in the UN mission in Juba.
He said the council had received only "patchy information" in a briefing given by UN peacekeeping chief Herve Ladsous.
"Some reports are speaking of hundreds of casualties. For the moment we can't confirm this, but in any case it is a heavy toll," Araud said.
He said the conflict had "the potential of a civil war" between the two main ethnic groups, the Dinka and the Nuer.
Amid the violence, the US has ordered all its non-emergency embassy staff to leave the country immediately.
President Kiir said the clashes began when uniformed personnel opened fire at a meeting of the governing party, the Sudan People's Liberation Movement (SPLM).
Fighting then continued into Monday when the government said it was back in full control.
However, fresh gunfire erupted on Tuesday near the presidential palace and many other areas of Juba.
Government officials say they are hunting for Machar, who is believed to be in hiding.
Information Minister Michael Makuei Lueth said that his whereabouts have been unclear since the start of fighting on Sunday.
He said Machar - who leads a dissident faction within the SPLM - was thought to have escaped with some troops.
On Tuesday, the government said former Finance Minister Kosti Manibe, former Justice Minister John Luk Jok and former Interior Minister Gier Chuang Aluong were among the 10 people arrested.
Many were members of the cabinet that was sacked in its entirety in July.
South Sudan has struggled to achieve a stable government since becoming independent from Sudan in 2011.
The independence referendum was intended to end a decade-long conflict, led by the SPLM, against the north.
But the oil-rich country remains ethnically and politically divided, with many armed groups active.
BA/BA