French forces have bombed rebel bases in Mali, where Islamist rebels have threatened to advance on the capital Bamako from their strongholds in the north. France said it had decided to act to stop the offensive, which could create "a terrorist state at the doorstep of France and Europe".
Islamist fighters in Mali have seized a town in government-controlled territory, though France said the Islamists were "in retreat" elsewhere.
French officials said Diabaly, 400km (250 miles) from the capital, Bamako, was taken in a counter-attack.
France began a military intervention on Friday in an effort to halt Islamists who took control of northern Mali last year and were advancing towards Bamako.
The UN Security Council has convened to discuss Mali at France's request.
Aid workers said many people had been fleeing areas targeted by French air strikes over the past four days.
The Islamists began a counter-attack on Diabaly, home to a key Mali army base, on Sunday night, hours after French warplanes had targeted the town.
French Defence Minister Jean-Yves Le Drian told BFM television: "They took Diabaly after fierce fighting and resistance from the Malian army that was not able to hold them off at that moment."
One resident told the BBC that the fighting had lasted for about 10 hours.
"About five [rebel] vehicles entered the town," he said. "Now they're stationed about 200m (650ft) from the military camp but they haven't taken the camp. They've killed a few soldiers."
A Malian military source told AFP news agency that rebels had come from the Mauritanian border area after being attacked by French planes. Rebels 'in retreat'
The BBC's Mark Doyle reports from Bamako that although the Islamists are still hundreds of miles away, the war was felt in the Malian capital as the president visited wounded soldiers in hospital there.
France intensified its air strikes on rebel targets over the weekend, with its aircraft also bombing the town of Gao in eastern Mali. On Monday witnesses told AFP there had been air strikes on Douentza for a fourth consecutive day.
"The developments are in line with our expectations," said Mr Le Drian. "The terrorist groups are in effect in retreat."
But he said French forces had encountered "heavily armed militants" in the west, where he described the situation as "difficult".
Rebels of the al-Qaeda-linked Movement for Oneness and Jihad in West Africa (Mujao), said that France would pay for its intervention.
Spokesman Abou Dardar told AFP: "France has attacked Islam. We will strike at the heart of France."
Separately, militants in Somalia have published a photograph purportedly showing one of two French soldiers killed during a failed hostage rescue attempt. Friday's raid on town of Bulo Marer, south of Mogadishu, came hours after the French intervention in Mali.
At least 11 Malian soldiers and a French helicopter pilot have died in Mali. More than 100 militants are reported to have been killed.
Medical charity Medicins Sans Frontieres said it had received numerous reports of people being killed or injured in Konna, and that in Douentza, bombardments and fighting were preventing the wounded from making it to hospital.
MSF said at least 200 people had fled to Mauritania by vehicle, with many more heading to the border on foot. African troops pledged
French Foreign Minister Laurent Fabius said France's involvement would last "a matter of weeks" and rejected any parallel with the protracted Western mission in Afghanistan.
He said preparations were "gathering pace" for the deployment of a West African force, including 600 troops from Nigeria, and 500 each from Niger, Burkina Faso, Togo and Senegal, and 300 from Benin.
"This international mobilisation is essential because France does not want to stand alone alongside Mali," he said.
France has sent about 550 troops to the central town of Mopti and to Bamako, and a defence ministry official told Reuters troop numbers would increase to 2,500 in coming days.
The UK is offering logistical support, with two cargo planes made available for a week to support French operations.
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.
One Islamist group, Ansar Dine, began pushing further south last week, seizing Konna.
The town has since been recaptured by Malian troops with French aerial support.