After days of fighting, soldiers have taken control of Konna, a key town about 700 kilometres from the capital Bamako, and in Diabaly, 400 kilometres north of Bamako.
Colonel Didier Dakouo, the head of the Malian forces based in Sevare south of Konna, told news agency AFP his troops had "crushed the enemy."
In Diabaly, which the Islamist militants had seized on Monday even as their bases were pounded by French fighter jets, local sources reported the rebels had been driven out.
"Diabaly is freed, the Islamists have left and the French and Malian troops have entered the town," said a member of the local municipal council. Her statement was confirmed by a regional security source.
The rebels' retreat coincided with a demand from veteran Algerian Islamist Mohktar Belmokhtar for talks to end the French campaign against extremists controlling the north of Mali.
Belmokhtar has claimed responsibility for launching Wednesday's attack on an Algerian gas complex, where Algerian and foreign workers are being held hostage.
A source close to him told Mauritania's ANI news agency that a video would be distributed to the media proposing that "France and Algeria negotiate an end to the war being waged by France in Azawad", or northern Mali.
The French military operation started a week ago and was prompted by the fall of Konna to rebels amid fears they would push south to the capital Bamako from their northern stronghold.
The UN refugee agency warned fighting in the next few months could displace another 700,000 people, taking the overall number of displaced passed the million mark.
"We believe that in the near future there could be up to 300,000 people additionally displaced inside Mali, and over 400,000 additionally displaced in the neighbouring countries," UNHCR spokeswoman Melissa Flemming told reporters in Geneva.
Paris says it already has 1,400 soldiers in Mali, set to increase to 2,500, while regional powers have pledged some 5,800 troops for an African military force.
French Foreign Minister Laurent Fabius said he would attend an emergency summit of the West African bloc ECOWAS on Saturday in the Ivory Coast city of Abidjan to accelerate the African deployment.