France said the advance was a success in its campaign to oust Islamist fighters from Mali's vast desert, where they have held sway for 10 months, raising fears the area could become a launchpad for international attacks.
"This advance by Mali's army into towns held by their enemies is a certain military success for the government in Bamako and for French forces supporting the operations," French Defence Minister Jean-Yves Le Drian said in a statement.
Diabaly, 350 km (220 miles) north of Mali's dusty riverside capital Bamako, had harbored the main cluster of insurgents south of the frontline towns of Mopti and Sevare. Douentza lies 800 km northeast of Bamako along the main road toward the rebel stronghold of Gao.
Residents of Diabaly said some of the rebels had abandoned their flowing robes to blend in with the local population. The charred and twisted wreckage of their pick-up trucks with machineguns mounted on the back littered the sandy streets between the mud-brick buildings.
France has deployed 2,000 troops to Mali and its warplanes pounded rebel columns and bases for an 11th day on Monday. Its intervention turned back an Islamist column heading towards Bamako that threatened to topple Mali's government.
The stakes in Mali rose dramatically when Islamist gunmen cited France's intervention as their reason for attacking a desert gas plant in neighboring Algeria, seizing hundreds of hostages. Algerian troops stormed the complex at the weekend and Prime Minister Abdelmalek Sellal said 37 foreign workers died and seven are missing.
The region around Diabaly in central Mali has long been a hub for al Qaeda-linked cells believed to have camps in the Ouagadou forest near Mauritania's border.
The French commander in the region has warned rebels may have left mines and booby traps in the recaptured towns.
France now aims, with international support, to dislodge the Islamists from Mali's vast desert north, an area the size of Texas, to prevent them using it to launch attacks on the West or form lasting links with other Islamist groups such as Nigeria's Boko Haram or Somalia's al Shabaab.
It plans eventually to hand over the military operation to a U.N.-sanctioned African mission, although that deployment has been hampered by a lack of supplies, funds and training.
"Our goal is to hand over to AFISMA (African-led International Support Mission to Mali) as quickly as possible. Until that happens, we shall do our duty, and our African friends understand exactly what that duty is," French President Francois Hollande said on Monday.
"We know that's going to take time."
The Islamist alliance in Mali, grouping al Qaeda's North African wing AQIM and the Malian militant groups Ansar Dine and MUJWA, has imposed harsh sharia, carrying out amputations and destroying ancient shrines sacred to moderate Sufi Muslims.
A resident of Timbuktu told Reuters by satellite telephone on Monday that scores of pick-up trucks carrying Islamist fighters had arrived there since Saturday, as the rebels apparently pulled their forces back to their desert strongholds.
The information could not be independently verified.
RISK TO REGION
Veteran jihadist Mokhtar Belmokhtar claimed responsibility in the name of al Qaeda for the Algerian hostage-taking and his Mulathameen Brigade warned it would carry out further attacks on foreign interests unless the fighting in Mali stopped.
Britain, whose nationals were among those caught up in the hostage-taking, said it would not take any combat role in Mali and played down the prospect of military intervention in the wider region.
The United States has said it has no plans to send combat troops to Mali but had agreed to a French request for airlift capacity to help France move troops and equipment.
At a meeting with ECOWAS heads of state on Saturday, France appealed for international help to fund the U.N.-mandated African mission. A donors' conference will be held on January 29.
The African deployment is hampered by a lack of transport and supplies. Nigeria, Niger and Togo have deployed a few hundred troops and a first contingent of 50 Senegalese troops left for Bamako on Sunday. Diplomats said deployment of Senegal's full contingent of 500 soldiers was being held up by a lack of ammunition for their artillery.
The European Union said it would host a meeting on Mali on February 5 to include the United Nations, African Union and ECOWAS, the regional grouping of West African states.
The push northward by the Malian army has raised the specter of ethnic reprisals by security forces and militia groups. Human Rights Watch said it had received reports of serious abuses being committed by the Malian army against civilians in Niono.
There have also been reports of killings by Malian soldiers of lighter-skinned Arabs and Tuaregs, who are widely blamed for the rebellion that swept northern Mali.
(Additional reporting by Adama Diarra and Tiemoko Diallo in Bamako, and Vicky Buffery and Elizabeth Pineau in Paris; Writing by Richard Valdmanis; Editing by Daniel Flynn and Janet Lawrence)