The outbreak, UNICEF said in a statement on Monday, was first reported on 4 February when three deaths occurred and 48 patients were admitted to local health facilities.
The disease left hundreds of people needing medical attention - about half of them children.
"There are large numbers of cases and we are going through medical supplies very rapidly," Ben Parker, communication officer for UNICEF southern Sudan, told IRIN. "There is an especially urgent need for IV [intravenous] fluid in the treatment centres."
Southern Sudan remains lragely underdeveloped after 21 years of civil war between the former rebels of the southern Sudan People's Liberation Movement/Army and the Khartoum-based government.
The war, which ended with the signing of a peace deal in January 2005, killed at least two million people, uprooted four million more and forced some 550,000 to flee to neighbouring countries.
"Clean water supply in southern Sudan is generally lacking, with less than a third of the population having access to a safe source," UNICEF said.
"Yei town is typical of southern Sudan's urban centres in having insufficient boreholes for its growing population, leading to many people taking water directly from the river Yei, which is used for drinking, bathing and watering livestock," the agency added.
Noting that diarrhoea contributes to a very high under-five mortality rate in the region, UNICEF said very limited sanitation facilities and a generally poor hygiene situation worsened the threat.
"There is a need for high capacity electric water systems. The hand pumps currently being used are fine for rural areas, but for a large town like Yei, a much larger water system is necessary," Parker said. "It is also important to carry out public education on hygiene to prevent further outbreaks."
UNICEF had responded with 20,000 sachets of oral rehydration salts, 1,000 sachets of intravenous fluid, 25,000 bars of soap, 200 buckets and 100 jerry cans. More medical and water and sanitation stocks were being mobilised as part of a coordinated response by UN agencies and NGOs led by the southern Sudanese government.
"A broad effort is being mounted by agencies in Yei to enhance access to clean water and sanitation as well as launch public awareness campaigns about the importance of good hygiene and clean water which include house-to-house visits," it added.
As part of the UN and Partners Work Plan launched in December 2005, UNICEF is appealing for US $20.3 million for water, sanitation and hygiene programmes in southern Sudan for 2006. The agency said about 40 percent of this amount had been covered by contributions and firm pledges.