To demonstrate the role played by the von Neumann entropy (vNE) spectra in quantum phase transitions we investigate the one-dimensional anisotropic SU(2) 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 (SOE) and having orbital correlations, while all the other phases are disentangled. For anisotropic XXZ orbital interactions both SOE 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 vNE spectral function as a valuable tool to identify the change of ground state degeneracies and of the SOE of elementary excitations in quantum phase transitions.