The fickle ceasefires agreed since conflict broke out in 2013 have seen nearly one out of five South Sudanese displaced. The young African State has been at war for 42 yearsout of the last six decades.
Mr Kiir's chief negotiator nevertheless said the deal was a sell-out that could not be implemented as the rebels are split. A key issue is thought to be a proposed power-sharing deal which could see Mr Machar return as vice-president.
The deadline for a peace deal expired on Monday night, and South Sudan's warring parties may now face international sanctions. Tens of thousands have died and more than two million have been displaced since fighting broke out in the young state in 2013.
The sides traded accusations about who was responsible for an attack in the town of Pageri, near the border with Uganda, early on Tuesday.
Military spokesman Philip Aguer said rebel accusations were "lies" and blamed them.
At Monday's summit in Ethiopia attended by regional powers and international mediators, South Sudan's government initialled a draft agreement, but requested a further 15 days before signing in full. Mr Machar did sign it.
UN Secretary-General Ban Ki-moon urged Salva Kiir to sign up and cease hostilities, saying he was "deeply pained by the horrendous suffering of South Sudanese civilians".
The US was "deeply disappointed" that President Kiir's government had "yet again squandered" an opportunity to bring peace by refusing to sign the agreement, a statement from US National Security Adviser Susan Rice said.
"The US deplores this failure of leadership," it added.
A Ugandan spokesman said his government knew how hard it was to achieve peace "especially when the belligerents have big egos and... put their personal egos above national interests".
"We can only continue to mediate, to encourage every side to realise that their country is superior to every one of them individually," Shaban Bantariza said, quoted by Reuters as quoted by our source.
