  To demonstrate the role played by the von Neumann entropy spectra in quantum
phase transitions we investigate the one-dimensional anisotropic SU(2)$\otimes
XXZ$ spin-orbital model with negative exchange parameter. In the case of
classical Ising orbital interactions we discover an unexpected novel phase with
Majumdar-Ghosh-like spin-singlet dimer correlations triggered by spin-orbital
entanglement and having $k=\pi/2$ orbital correlations, while all the other
phases are disentangled. For anisotropic $XXZ$ orbital interactions both
spin-orbital entanglement and spin-dimer correlations extend to the
antiferro-spin/alternating-orbital phase. This quantum phase provides a unique
example of two coupled order parameters which change the character of the phase
transition from first-order to continuous. Hereby we have established the von
Neumann entropy spectral function as a valuable tool to identify the change of
ground state degeneracies and of the spin-orbital entanglement of elementary
excitations in quantum phase transitions.
