Obama, who deployed 45 US military personnel on Wednesday to protect American citizens and property, said: "Recent fighting threatens to plunge South Sudan back into the dark days of its past."
In a strongly-worded statement to date on the bloodshed in the world's newest country, Obama warned: "South Sudan stands at the precipice."
Sudan suffered the brutal civil war from 1983 to 2005 that left over two million people dead before the South became independent in July 2011.
The turmoil has pitted gangs from the Nuer ethnic group of Machar against Dinkas - the majority group to which Kiir belongs, raising fears of an ethnic conflict.
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Recalling the promise and hopes that accompanied South Sudan's independence, Obama warned "that future is at risk".
"Inflammatory rhetoric and targeted violence must cease. All sides must listen to the wise counsel of their neighbours, commit to dialogue and take immediate steps to urge calm and support reconciliation," he said in a letter to Congress.
"We can confirm that two UNMISS Indian Battalion troops were killed in action. UNMISS can also confirm that one injured Indian soldier has been transported to the Mission's medical facility in Malakal," a UN press release said.
The UN today reported 14 separate sites of fighting or civil unrest, many in the troubled eastern state of Jonglei, with 34,000 civilians sheltering in or around UN bases.
The attack on the UN base came after troops loyal to Machar seized the town of Bor late Wednesday, as heavy fighting continued in several sites across Jonglei state.
A number of countries were preparing to evacuate their nationals. Britain was sending another flight today, a day after a military transport plane evacuated 182 people, including 53 Britons, to Uganda.
A US plane was also due to take Americans out of the country. And China's National Petroleum Company was evacuating oil workers to Juba.