A local government official, Charles Kisagna, said at least 100 people were killed and a further 50 people were injured in the blast in Maridi in the country's heavily rural Western Equatoria state when the truck veered off the road.
The local county commissioner, Wilson Thomas Yanga, told the BBC that the death toll had risen to 176 and said officials were concerned that the true number of wounded was not currently known as many are believed to have fled the scene.Mr Kisagna said local hospitals had been overwhelmed by the injured saying: "We don't have medical equipment and these people may not survive because we do not have the facilities to treat the highly burnt people."
A local doctor told Sudanese radio station Radio Tamazuj that they were running out of basic medical supplies like oyxgen and pain killers.
Layal Horanieh, spokeswoman for the International Committee of the Red Cross in the South Sudanese capital of Juba, said the aid group had sent two burn kits to Maridi, each with enough equipment to treat at least 50 patients.
According to local officials, the vehicle was "full of petrol" which started to leak after the crash.
The driver is reported to have walked to the next village to ask for help and locals began siphoning off fuel. Someone is believed to have lit a cigarette, sparking an explosion.
Around 60 people, including women and children, were burned to death on the spot, Radio Tamazuj reports.
South Sudan, which officially broke away from Sudan in 2011 and has been mired in conflict since December 2013, has no tarmac roads and fuel tankers have to travel along potholed surfaces through desperately poor communities.
Presidential spokesman Ateny Wek Ateny said the incident was "an accident" and had nothing to do with the ongoing conflict.
Deadly fuel tanker explosions are common in East Africa, where poor residents living near highways converge around fuel tankers involved in accidents to steal gas and then sell it.
Additional reporting by AP and Reuters
Comment: South Sudan is another country that has suffered due to Western meddling. Creating decent infrastructure is last on the list when power is up for grabs.