Islamist fighters have withdrawn from two towns in central Mali following French air strikes, officials say.
Mali's army earlier said it had recaptured Konna, which triggered the French intervention after it was seized by the rebels.
Now the mayor of Diabaly says soldiers have taken control of the town.
Islamist fighters in neighbouring Algeria say they have kidnapped foreign gas workers in retaliation for France's involvement in the Mali conflict.
Meanwhile, the UN refugee agency says it fears the fighting could force 700,000 people from their homes.Mali Islamists 'flee two towns'
Some 150,000 people have already gone to neighbouring countries, Reuters news agency reports.
It quotes the UNHCR as saying that 400,000 more could flee Mali, with a further 300,000 displaced within the country.
The first 100 troops of an African force landed in the capital, Bamako on Thursday evening.
The soldiers from Togo and Nigeria are part of a long-planned West African force that will join the French and Malian armies in fighting the Islamist insurgents who took over northern Mali last year.
Nigeria says it will increase its forces to 1,200.
France says it now has 1,800 troops in Mali after intervening initially with air strikes to try to halt a rapid advance by the Islamists.
Correspondents say a strong French contingent is at Segou, north-east of Bamako, to guard a major bridge across the Niger river, which the rebels would have to cross to threaten the capital.
'Hide in the orchards'
Bamako-based journalist Kodji Siby told BBC Africa that he had spoken to residents in Konna, about 550km (340 miles) north of Bamako, who said the Islamists fled the town when Malian soldiers deployed.
"We have wrested total control of Konna after inflicting heavy losses on the enemy," the AFP news agency quoted a Malian army statement as saying.
Earlier this week, French officials denied a claim by the Malian army that the government had regained Konna.
The area is not accessible to independent observers. The aid group Doctors Without Borders told the Associated Press it had been trying to get to Konna since Monday but all roads leading to the area were closed by the Malian military.
On Thursday, French forces were bombing the town of Diabaly, 350km from capital, which was captured by Islamists earlier in the week.
There was fighting on the streets until 03:00 GMT on Friday, Diabaly Mayor Oumar Diakite said from nearby Niono - and Islamists were reported to be leaving the town.
"Soldiers are in the town carrying out mopping up operations," he told Reuters news agency by telephone.
"There are lots of burned-out vehicles that the Islamists tried to hide in the orchards."
His information was coming from residents who were telephoning him.
Getting accurate reports from the area has been difficult, as the rebels had destroyed mobile phone masts to prevent local people passing information on rebel movements, he said.
The residents had to travel outside the town to make the phone calls, he said.
In total, 3,300 regional troops will be deployed in the conflict under a UN Security Council resolution.
Defence sources say France is likely to boost its troop numbers to 2,500.
Nigeria will lead the West African force, with Chad, Benin, Ghana, Niger, Senegal, Burkina Faso and Togo also sending soldiers.
Islamist groups and secular Tuareg rebels took advantage of chaos following a military coup to seize northern Mali in April 2012. But the Islamists soon took control of the region's major towns, sidelining the Tuaregs.