The rebel Cobra Faction is also set to release another 400 child soldiers in the next two days under a deal with the government, out of total of 3,000 it holds, UNICEF said.
However, the scourge of child recruitment is far from over in South Sudan, as some 12,000 youngsters are still fighting in the ranks of the country's warring factions, the UN says.
Civil war broke out in the world's youngest nation in December 2013, after President Salva Kiir accused rebel leader Riek Machar of attempting a coup.
The violence has put paid to a law that Kiir and Machar signed in 2008 banning the use of child soldiers and setting a minimum age of 18 for recruitment or conscription.
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Earlier this month, UNICEF accused both the government and rebel groups of forcibly enrolling hundreds of children in their ranks in February alone.
The government and the rebels have been accused of widespread atrocities and war crimes including gang rapes, massacres and attacks on aid organisations and peacekeepers.
Among them were four girls, one as young as nine, UNICEF said.
"UNICEF and partners will then begin the process of tracing their families, and where necessary providing psychosocial support," the agency said.
"While we welcome freedom for the children, we are also deeply disturbed by the hundreds of children being abducted in Upper Nile and Unity States," it said, condemning their recruitment as a "violation of human rights".