Al-Qaeda-linked rebels in Mali launch a counter-offensive, taking the town of Diabaly, 400km from the capital Bamako, after three days of French fighter jet strikes on their desert strongholds.
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French Defence Minister Jean-Yves Le Drian confirmed that the town, previously under control of the Mali authorities, had been taken.
"They came from the Mauritanian frontier, where they had been bombarded by the French army," he said.
It follows French intervention on Friday after the rest of Europe and the Americans said such action could take months, despite the country's calls for assistance.
Now rebels have warned that France will pay for their actions, threatening to drag it into a long and brutal ground war.
Britain has agreed to provide "logistical assistance" but will not be sending any troops.
Launching a counter-attack far to the south west of recent fighting, the Islamists clashed fiercely with government forces on Monday in the central town of Diabaly, residents and Malian military sources said.
President Francois Hollande says France's aim is simply to support a mission by Ecowas (the Economic Community of West African States) to retake the north, as mandated by a UN Security Council resolution in December. Under pressure from Paris, regional states have said they hope to have soldiers on the ground in coming days.
President Hollande's intervention has won plaudits from western leaders but raises the threat level for eight French hostages held by al-Qaeda allies in the Sahara and for the 30,000 French expatriates living in neighbouring, mostly Muslim states. Concerned about reprisals at home, France has tightened security at public buildings and on public transport.
At least 11 Malian soldiers and a French helicopter pilot have died since Friday. More than 100 militants are reported to have been killed.
A spokesman for the MUJWA Islamist group, one of the main factions in the rebel alliance, promised French citizens would pay for Sunday's air strikes in their stronghold of Gao. Dozens of Islamist fighters were killed when rockets struck a fuel depot and a customs house being used as their headquarters.
"They should attack on the ground if they are men. We'll welcome them with open arms," Oumar Ould Hamaha told Europe 1 radio. "France has opened the gates of hell for all the French. She has fallen into a trap which is much more dangerous than Iraq, Afghanistan or Somalia."
The unprecedented crisis comes just a year after Mali, which gained independence from France in 1960, was being held aloft as an example of sustained stability.
But in March last year mid-ranking army officer Capt Amadou Sanogo staged a coup following a mutiny at the Kati military camp located about 10km from the presidential palace in Bamako.
After the coup the Saharan branch of al-Qaeda seized control of the increasingly lawless area of northern Mali, effectively seceding from the rest of Mali and establishing a harsh form of Islamic law.
Ecowas agreed to launch a co-ordinated military expedition to recapture the north at a meeting in Nigeria in November, with UN backing, but it was while the UN was making preparations that the French decided to act.
The French appear determined to end Islamist domination of northern Mali, but some fear the move could act as a launchpad for attacks on the west and a basis for co-ordination with al-Qaeda in Yemen, Somalia and north Africa.