French and Malian troops have entered the town of Diabaly after a week of air strikes and fighting that followed its capture by Islamists a week ago.
France said on Sunday its aim is "total reconquest" of the north of the country, taken over by Islamists and Tuareg separatists last year.
A convoy of 30 armoured vehicles carrying about 200 French and Malian soldiers moved into Diabaly without meeting any resistance at about 9am local time on Monday, the AFP wire service reports.
French soldiers from the 21st Marine Infantry Regiment as well as parachutists and Malian troops entered the town after reconaissance flights by Gazelle helicopters, said an AFP reporter with the soldiers.
Officers feared that the fleeing jihadis had planted landmines.
French Defence Minister Jean-Yves Le Drian on Sunday confirmed that the town had not been captured after conflicting reports on its status but predicted that it would fall "in the coming hours".
French officers said that "in theory" the rebels had left the town, although a Malian colonel told AFP that "a fringe of the Diabaly population adheres to the jihadists' theories and we must be careful in the coming hours".
According to reports the Islamist militias are abandoning some of their positions and retreating to Kidal in the mountains near the Algerian border.
"The goal is the total reconquest of Mali," Le Drian told France 5 TV on Sunday, pledging to leave no pockets of resistance.
The seven French hostages held in Niger and Mali are alive and there have been contacts with the hostage-takers, Le Drian said.
Before the French intervention Al-Qaeda in the Islamic Maghreb (Aqim) threatened to kill the hostages if French troops joined the conflict.
Troops are also in Niono, 350 kilometres north-east of Bamako, and Sévaré, which has a strategically important airfield, the French military said earlier.
A Nigerian Islamist group, Ansaru, on Sunday claimed responsibility for killing two soldiers, who were due to go to Mali, and injured five others.
Nigeria has committed itself to sending 1,200 soldiers, raising a previous promise to send 900.
Fifty Senegalese troops have arrived in Bamako, taking the number there to 150.
Benin has announced that it will send 600 troops, raising an earlier pledge of 300.
A special meeting on who will pay how much of the costs of the operation is to take place at the African Union summit in Addis Ababa on Tuesday 29 January.
Estimates vary between 150 million euros and 375 million euros.
The European Union has pledged 50 million euros.